2.  »  ANALYSIS

Oil Prices Fall as The World Faces New Covid-19 Crisis "Omicron"

on 2021-11-30

View Profile of Nhim Kosol

Crude oil continued to fall after hitting a record high of $84.91 a barrel in November, falling further last Friday from $78.15 a barrel to $67.35 a barrel after the world is worried about the new variant "Omicron", especially concerns about re-lockdown, which could affect worldwide crude oil demand as a whole. 

A number of large countries have also begun to respond to Omicron variant: 

•    Japanese Prime Minister, Fumio Kishida, announced at a Kassel conference on Monday that he may suspend all international visitors to Japan. Japan from nine destination countries (unnamed), including South Africa, has been suspended. If Japanese nationals wishing to return home from 14 destinations (unnamed) or areas that have been confirmed to be infected with Omicron, they will be isolated for 14 days. The measure will be implemented late Tuesday night, as reported by Rueter News.

•    President Joe Biden, after discussing and listening to the views of Dr. Anthony Fucci, Director of the National Institute of Allergy and Infectious Diseases, he held a conference to raise concerns about Omicron, "He urges people to wear masks in the city, and he has confidence in the health department and the vaccine producers, the effectiveness of their vaccines, especially for those who have been vaccinated for the third time.” More than 30 percent of Americans have not yet been vaccinated. "There will be no blockade of the area, only restrictions on travel from Africa and PCR testing for safety," Biden said.

•    Australia, after closing its borders more than 18 months ago, which reopened in early November, is preparing to open up to a wider country, facing uncertainty over the Covid-19 new Omicron after discovered several new cases in some of its states among travelers from South Africa last weekend.

Oil prices also fell after being hit by a U.S. announcement to release its oil reserves to counter the rising crude prices to a record high in October. OPEC +, meanwhile, has announced that it will maintain its production plans and position, not following the US Joe Biden’s call.

•    OPEC + plans to increase its production line by 400,000 barrels per day for the upcoming January.

•    The continued decline in oil prices may be due to speculation that OPEC + may likely suspend plans to increase its production chains, while Omicron is holding oil prices.

•    OPEC + has rescheduled two technical meetings to allow the Alliance time to study the effects of Omicron on oil prices, while OPEC + general meetings still continue to be held on Wednesday and Thursday this week.

According to research on Omicron, I personally find that the market is unlikely to change much as the big countries are at a level where they can manage risk and continue to study it further. What is important for crude oil investors is the OPEC + meeting on Thursday to determine their oil policy.

Trading Recommendations ahead of OPEC + investors can buy and sell oil prices between prices:

•    Buy at $68, manage risk at $66 and make a profit at $74.50

•    Sell at $75, manage risk at $77 and make a profit at $70

Analyzed by: Mr. Nhim Kosol
Business Manager of Golden FX Link Capital

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