All Eyes on Omicron Covid Variant This Week

(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author)

In this week’s preview of what to watch in oil and gas markets, Rigzone’s regular energy prognosticators focus on the Covid Omicron variant, oil price trends, drilling and more. Read on below to find out the specifics.

Rigzone: What developments/trends will you be on the lookout for this week?

Jon Donnel, Managing Director, B. Riley Advisory Services: Precise demand implications resulting from the new Omicron variant will be the primary driver of near-term oil prices. The swift reactions to implement lockdowns and travel restrictions have served to flatten the curve for WTI and Brent futures, especially when combined with policies to sell strategic reserves and OPEC+ holding firm on production quotas. Early indications are that the new variant is quite contagious, but it is not understood how severe symptoms may be or whether current vaccines and boosters will be sufficient to keep case counts under control. Oilfield activity levels were likely to decline or at least slow down heading into the holiday season and the new demand risks may serve to dampen expectations for spending plans and capital allocation to begin the new year, both of which should help put a floor under the current spot prices.

Michael Osina, Grant Thornton National Partner in Charge of Energy – Tax: The impact on the market of the new Omicron variant will be something that is worth watching. While the initial indication is that this variant has mutated significantly and is more transmissible, it seems the general public’s concern over Covid has eroded, which may suggest a temporary dip in prices, but expectations are that it will be short-lived.

Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: With the first case of the Omicron variant in the U.S. confirmed, the market will have to monitor the daily progression of this, as well as any possible lockdowns or other energy demand reducing actions that may be implemented. Christmas holiday travel may also be impacted now.

Barani Krishnan, Senior Commodities Analyst at investing.com: A little more rebound in crude prices unless Omicron fears get further heightened.

Tom McNulty, Houston-based Principal and Energy Practice Leader with Valuescope, Inc: Look for more and more completions of DUC wells, another 150+. In general, there is no need to drill lots of new wells with a large inventory of DUC wells in place that can be completed.

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