Gas and oil prices have silver lining as investors assess Omicron variant risks

Jury still out on whether Omicron will fuel inflation by hitting supply chains or drive inflation lower if it keeps energy prices lower

European shares regained some of their ground lost on Friday as investors assessed the latest views from the World Health Organization on the seriousness of the new Covid variant. 

Stock markets scrambled on Monday to weigh the potential seriousness of the Covid-19 Omicron variant on economies around the world, but easing costs of wholesale gas and crude oil suggested some sort of silver lining. 

Capital Economics, a consultancy, has said the jury was still out on whether Omicron will fuel inflation by hitting supply chains or drive inflation lower if it keeps energy prices lower.

The price of European wholesale gas traded in the Netherlands energy hub held steady on Monday at €92 per megawatt hour, little changed from recent weeks when  Russia's Gazprom had delivered additional supply to Europe. 

The gas price compares with the record high of €116 per MW hour reached in early in October but is still sharply up from €49 per MW hour at the start of September. 

That autumn spike has already pushed Irish household utility bills higher.  

Gas is used help generate electricity across Europe and the wholesale price is closely watched this winter for signs of potential new inflation pressures building in the pipeline for businesses and households.                                 

The price of the Brent global crude oil price rose to $76.50 a barrel on Monday but was still below $80 a barrel before investors took fright late last week at the Omicron variant. 

Share prices regain some ground

Meanwhile, European shares regained some of their ground lost on Friday as investors assessed the latest views from the World Health Organization on the seriousness of the new Covid variant. 

Frankfurt's Dax, the Cac in Paris, and London's Ftse rose by up to 1.5%. Shares in Dublin were mixed. 

Irish stocks, including Ryanair, the two main banks, and Dalata Hotel Group, all traded higher.

 These stocks are effectively indices for investors to risks that Covid-19 Delta virus or a new variant like Omicron will lead to new economic restrictions and lockdowns.

Ryanair, up 2.5%, clawed back some of substantial losses from Friday, and shares in Dalata, the largest hotel operator in Ireland and owner of the Clayton and Maldron chains, were up 1.6%; Bank of Ireland rose 2.5%.

Paddy Power owner Flutter, the international bookie and online gaming group, which had prospered during the global lockdowns last year, were also up sharply in Dublin, by over 2%.