Crude oil futures climb for third day amid easing COVID-19 worries

Crude oil futures rose in mid-morning trade in Asia Dec. 23, on track for a third straight day of gains, as emerging studies continued to downplay the severity of the coronavirus omicron variant.

US inventory data showing a large draw in crude oil stocks last week also lent support.

At 9:55 am Singapore time (0155 GMT), the ICE February Brent futures contract was up 35 cents/b (0.46%) from the previous close at $75.64/b, while the NYMEX February light sweet crude contract rose 34 cents/b (0.47%) at $73.10/b.

"The Omicron virus front continued to see some downplaying of risks overnight. Coming after [US] President Biden's recent reassurance of restrictions as the less-preferred approach, studies continue to show that the Omicron is far below the Delta variant in terms of hospitalization risk," said IG market strategist Yeap Jun Rong.

A South African study released Dec. 22 showed that those infected with the omicron variant were less likely to get hospitalized than those with the delta variant.

Meanwhile, the US has authorized Pfizer's orally-administered antiviral COVID-19 pill for people aged 12 and older at risk of severe illness from the virus. The at-home treatment pill is expected to ease the strain on hospitals.

Also aiding sentiment was news of a draw in US crude oil stocks last week, which sent both front-month crude oil benchmarks settling higher by 1.7-2.3% overnight. Both benchmarks have now advanced up to 6% in the last two days alone.

In the US, Energy Information Administration data showed US crude oil stocks falling 4.72 million barrels to 423.57 million barrels in the week to Dec. 17, pushing stocks more than 8% behind the five-year average for this time of year -- the tightest since mid-September.

Nationwide gasoline stocks meanwhile surged 5.53 million barrels to an 11-week high of 224.12 million barrels, while distillate stocks posted a counter-seasonal build of 400,000 barrels to 124.15 million barrels.

OANDA senior market analyst Edward Moya said in a Dec. 22 note that he expects oil prices to remain mostly rangebound until the year-end.

"Traders refuse to put on any major positions as too much uncertainty persists with the short-term crude demand outlook and while trading volumes continue to fall leading up to the holidays. Oil prices seem like they could go much higher in the New Year once the demand outlook is beyond the current omicron wave," Moya said.