LONDON: Oil rebounded by more than 5 percent on Monday to above $76 a barrel as some investors viewed Friday’s slump in oil and financial markets as overdone while the world awaits more data on the omicron coronavirus variant.
Brent crude was up $3.66, or 5 percent, at $76.38 a barrel by 1444 GMT, having slid by $9.50 on Friday. US West Texas Intermediate crude was up $4.36, or 6.4%, at $72.51, having tumbled by $10.24 in the previous session.
“We saw some correction as Friday’s plunge in oil prices has been overdone,” said Tatsufumi Okoshi, a senior economist at Nomura Securities.
Friday’s slide, the biggest one-day drop since April 2020, reflected fears that travel bans would hammer demand. The plunge was exacerbated by low liquidity owing to a US holiday and the expected demand hit does not justify such a fall, analysts said.
“The fear factor had its grip on financial markets on Friday,” said Norbert Ruecker of Swiss bank Julius Baer. “Fundamentally, the announced and enacted international air travel constraints cannot explain such a sharp slump.”
A semblance of calm also returned to wider markets on Monday as investors awaited more information about the new variant. European and Wall Street shares rose while safe haven bonds lost ground.
“I can’t help but feel that Friday’s lows were probably the bargain of the year if you were an oil buyer, speculative or physical,” said Jeffrey Halley of brokerage OANDA.
