Oil pared gains late on Monday, but finished the session higher as investors viewed Friday's slump in oil and financial markets as overdone absent more data on the Omicron coronavirus variant.
Brent briefly surged above $77 a barrel, while U.S. crude touched highs above $72. However, both contracts gave up gains late in the session.
Brent crude futures settled at $73.44 a barrel, up 72 cents or 1%, having slid by $9.50 on Friday. U.S. West Texas Intermediate (WTI) crude settled up $1.80, or 2.6% at $69.95 a barrel. The contract tumbled $10.24 in the previous session.
In post-settlement trade, Brent briefly turned into negative territory on thin volumes.
Friday's slide was the biggest one-day drop since April 2020, reflecting fears that coronavirus-related travel bans would hammer demand. The plunge was exacerbated by lower liquidity owing to a U.S. holiday.
"We believe that the plunge in oil prices has been overblown," said Michael Tran, an analyst at RBC Capital Markets, noting that the sharp fall in prices suggests a much weaker level of demand than is currently being seen.
If the new variant of the virus proves vaccine-resistant or more contagious than other variants, it could impact travel, commerce and petroleum demand.
The World Health Organization has said it could take weeks to understand the variant's severity, though a South African doctor who has treated cases said symptoms seemed to be mild so far.
Top officials from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, echoed that view, with the Saudi energy minister quoted as saying he was not worried about the Omicron variant.
Omicron has created a new challenge for OPEC+, which meets on Dec. 2 to discuss whether to proceed with a scheduled January increase to oil output. OPEC+ has postponed technical meetings this week to gain time to assess Omicron's impact.
Brent prices have given up $10 in the past two weeks.
President Joe Biden urged Americans not to panic about the new COVID-19 Omicron variant and said the United States was working with pharmaceutical companies to make contingency plans if new vaccines were needed.
Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud said he was not worried about Omicron, Asharq Business reported, while his Russian counterpart said he sees no need for urgent action on the market.
(Reporting by Jessica Resnick-Ault in New YorkAdditional reporting by Yuka Obayashi and Alex LawlerEditing by Marguerita Choy and Matthew Lewis)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)