WTI back above $76.00 as traders continue to price out Omicron risk

• WTI trades just above $76.00, supported as Omicron pessimism is priced out and amid supply outages.
• WTI only trades about $2.0 below pre-Omicron levels above $78.00, suggesting fears of economic disruption have mostly been priced out.

Oil prices have pared earlier gains with front-month WTI futures currently trading just above the $76.00 mark, after running into resistance at the 50-day moving average at $76.66 and at the $77.00 level earlier in the session. WTI continues to trade with substantial gains on the week of nearly $2.50 (over 3.0%), after surging above resistance in the $74.00 and $75.00 areas on Monday.

Crude oil prices have been moving higher in recent sessions in tandem with global equity markets and other risk assets as traders continue to price out Omicron-related pessimism. Studies last week showed infection with the new Covid-19 variant to be comparatively mild, thus reducing the pressure on governments to implement economically harmful lockdowns and oil-demand destroying travel restrictions. WTI is only trading about $2.0 below its pre-Omicron levels just above $78.00, indicative of the fact that most of associated fears of economic disruption have now been priced out.

Traders have also been citing supply disruptions in the likes of Ecuador, Libya and Nigeria as positive for oil prices this week, with producers in each of these nations declaring force majeures amid problems with maintenance and other issues. Coming up, US weekly private crude oil inventory numbers are out at 2130GMT ahead of the official EIA release at 1530GMT on Wednesday. A poll released by Reuters on Monday showed that inventories are expected to post a fifth successive draw (of slightly over 3.2M barrels). Beyond that, the next OPEC+ meeting (on 4 January) is fast approaching and traders will be on the lookout for any commentary from oil ministers/insight from inside sources.