Oil Price Fundamental Daily Forecast – Last Week’s Momentum Dimmed as Omicron Surge Hits Air Travel

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Monday after U.S. airlines canceled thousands of flights over the Christmas holidays amid rapidly spreading COVID-19 infections.

Late last week, both markets changed trend on the daily chart on easing Omicron concerns, but the lack of follow-through to the upside amid the jump in infections could encourage buyers to book profits, leading to a near-term correction.

At 09:22 GMT, March WTI crude oil futures are trading $72.55, down $0.87 or -1.18% and March Brent crude oil is at $75.76, down $0.88 or -1.15%. On Thursday, the United States Oil Fund ETF (USO) settled at $53.13, up $0.65 or +1.24%.

COVID-19 Wrecks Americans’ Holiday Air Travel Plans Raising Concerns Over Jet Fuel Demand

U.S. airlines canceled more than 1,300 flights on Sunday as COVID-19 thinned out the number of available crews, while several cruise ships had to cancel stops after outbreaks on board, upending the plans of thousands of Christmas travelers, Reuters reported.

Commercial airlines had canceled 1,318 flights within, into or out of the United States by mid-afternoon, according to a tally on flight-tracking website FlightAware.com.

With rising infections, airlines have been forced to cancel flights with pilots and cabin crew needing to quarantine while poor weather in some areas added to travelers woes.

Asia Distillates Jet Fuel Cash Premiums Slide, Crack Spreads Dip

Asia’s cash premiums for jet fuel slipped to their lowest in more than three weeks on Friday, posting a weekly drop, as airlines continue to struggle with weak capacity amid Omicron-led travel restrictions.

Cash premiums for jet fuel dropped to 28 cents per barrel, the lowest since November 29. According to the Singapore Exchange, the differentials shed nearly 63% this week.

In other news, the refining margins, also known as cracks, for jet fuel dipped to $11.05 per barrel over Dubai crude during Asian trading hours, 34 cents lower from a day earlier.

Daily Forecast

Gains are likely to be capped on Monday if Omicron concerns continue to dominate the headlines. The markets could get a lift from speculative buyers, however, if risk sentiment picks up where it left off last week.

But buyers may have a hard time justifying putting on new positions with Dr. Anthony Fauci, the nation’s top infectious disease official, warning of rising U.S. cases in coming days.

“It likely will go much higher,” Fauci said of the Omicron-driven surge.