Sentiment has taken a turn for the better during US trading hours, with a string of positive Covid-19 developments/stories seemingly injecting a dose of optimism into a market that had otherwise been subdued and in holiday mode. This is giving crude oil a lift and front-month WTI futures recently crossed back to the north of the $72.00 level, where it trades at weekly highs. On the day, WTI is now close to $1.0 higher and the bulls will be eyeing a test of the $73.00 level, a key zone of resistance that has capped the price action for the whole of December thus far.
In terms of the recent positive developments, the US FDA just approved Pfizer’s Paxlovid pill to treat Covid-19 infection in at-risk patients at home. As long as patients begin treatment within five days of infection, the pill allegedly reduces hospitalisation and mortality rates in the at-risk by as much as an incredible 90%. Pfizer said it was ready to begin distributing the drug in the US immediately and other nations will likely approve the drug and start rolling it out soon too.
Elsewhere, more studies on the severity of Omicron have been released (one out of Scotland and one out of South Africa) and both strengthen the narrative that infection with Omicron is significantly less likely to result in hospitalisation. The above news will strengthen investor conviction that the hit to the global economy posed by Omicron will not be catastrophic or long-lasting. Of course, this is great news for crude oil markets, just as it is for other risk assets.
Elsewhere in notable crude oil markets news, official weekly US oil inventories were out and, as indicated by the private weekly API report on Tuesday, the drawdown in headlines stocks was much larger than expected at over 4.7M barrels. This supported crude oil prices, despite a massive, unexpected more than 5.5M build in gasoline stocks and a surprise drop WoW in refinery utilisation rates.
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