Crude oil surged 4% on Tuesday, boosting crude ETFs as well, ahead of the much-anticipated API crude oil inventory data report as well as predictions that spiking coronavirus cases and the dissemination of the Omicron variant will prove less harmful to a global demand recovery than believed yesterday.

Brent crude climbed $2.6, or 3.22%, to $83.46 a barrel, its highest level since early November, after having shed 1% in the previous session.

Meanwhile, U.S. benchmark, West Texas Intermediate (WTI) ripped over $3.20, or 4% higher, to $81.59, also notching its highest since mid-November, after dipping 0.8% in the prior session due to coronavirus concerns.

Over the weekend, the country of Cyprus said it discovered a coronavirus variant that combines the Omicron and Delta variants, which has been dubbed the “Deltacron” variant.

Specifically, the variant has “omicron-like genetic signatures within the delta genomes,” according to CNBC.

Leondios Kostrikis, professor of biological sciences at the University of Cyprus, said that 25 cases of the virus had been found. Any transmissibility and severity of the data remain unclear, according to CNBC. “We will see in the future if this strain is more pathological or more contagious or if it will prevail,” Kostrikis said.

Experts were uncertain if the Deltacron variant is real or not, with Biologist Eric Topol of the Scripps Research Translational Institute stating that Deltacron might be a “scariant” resulting from an error, or a “New subtype of scariant that isn’t even a real variant but scares a lot of people, unnecessarily,” Topol tweeted.

While Kostrikis certainly disagrees, it’s a reminder to investors that the pandemic is far from over, as COVID-19 can continue to mutate and create new variants.

In the previous session, crude fell along with stocks as Deltacron worries generated demand fears for crude oil investors, particularly with regard to China, which has in the past aggressively closed off infected regions of the country to stem the spread of the virus.

On Tuesday, however, the market had reversed any fears of demand on reports that Deltacron may be the result of a lab error.

“The Cypriot ‘Deltacron’ sequences reported by several large media outlets look to be quite clearly contamination,” Tom Peacock, a virologist with the infectious diseases department at Imperial College London, tweeted over the weekend. According to Peacock, the reported new strain was most likely the result of a lab error that commingled samples from patients infected by Omicron and others by Delta.

Adding to crude’s rise is news that OPEC+’s excess capacity will diminish into the second half of 2022, as it gradually boost output targets between now and then at the speed of as much as an additional 400,000 barrels per day (bpd) each month.

A dearth of capacity in some countries signaled that supply increases by the OPEC are running beneath the allowable increase under a pact with its allies.

In addition, Federal Reserve Chair Powell said on Tuesday that he expects the economic impact of the Omicron variant to be short-lived. He also commented that upcoming quarters could be very beneficial for the economy after Omicron subsides.

“Combination of facts that demand is going to be stronger than anticipated and that OPEC’s supply may not be grow as fast as the demand is why prices are climbing,” said Phil Flynn, senior analyst at Price Futures Group.

“Omicron has yet to wreak the havoc of the Delta variant and may never do so, keeping the global recovery on track,” said Jeffrey Halley, analyst at brokerage OANDA.

Crude oil has been on a tear since last year, with Brent climbing by 50% in 2021 and gaining further traction so far this year, with investors projecting increasing demand.

A weaker U.S. dollar also helped to bolster oil, as it makes oil less costly for buyers holding other currencies and typically reflects higher risk appetite among investors. The dollar weakened in part because traders are concerned with December inflation data that is scheduled to be released on Wednesday, as well as potential  interest rate increases by the Federal Reserve.

Upcoming reports on U.S. inventories are predicting crude stockpiles to drop by about 2 million barrels.

Meanwhile, the Biden administration is hoping to minimize the region of land in Alaska that is available for oil drilling, potentially reversing Trump-era legislation that opened up 82% of the National Petroleum Reserve for drilling, The Hill writes.

According to Reuters, the Trump administration failed to help reverse a decline in Alaska oil production, which fell to the lowest in 43 years in 2020 as oil companies focused on the Lower 48.

Under the revisions made by the Bureau of Land Management, approximately 52% of the National Petroleum Reserve will remain open for oil drilling, but the Bureau also said that it will keep some stipulations from the Trump-era legislation, namely, “certain more protective lease stipulations and operating procedures for threatened and endangered species.”

“This decision reflects the Biden-Harris administration’s priority of reviewing existing oil and gas programs to ensure balance on America’s public lands and waters to benefit current and future generations,” the Bureau of Land Management said in a statement.

All of these economic and geopolitical factors could be bullish for crude oil, and investors looking to use ETFs to trade a continuing upswing could consider employing crude ETFs like the United States Oil Fund (USO), which is up over 3.4% on Tuesday, and the ProShares Ultra Bloomberg Crude Oil (UCO)which has climbed almost 6.5% thanks to leverage.

For investors looking for crude ETFs to play the run-up in oil, which has been robust since November, the United States 12 Month Oil Fund (USL) and the iPath Pure Beta Crude Oil ETN (OIL) are two other funds to consider.

Meanwhile, for those investors with more bearish leanings, the ProShares UltraShort Bloomberg Crude Oil (SCO) offers opportunities for savvy investors if oil sells off.

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