Crude Oil Heads for Best Week Since Mid-December

Brent crude futures climbed 57 cents, or 0.7%, to $82.56 a barrel, after a 1.5% jump in the previous session. US West Texas Intermediate crude futures rose 67 cents, or 0.84%, to $80.13 a barrel, extending a 2.1% gain in the previous session, CNBC reported.

Brent and WTI were on track for a more than 6% gain in the first week of the year, with prices at their highest since late November, as supply concerns overtook worries that the rapid spread of the Omicron coronavirus variant might hurt demand.

“The upward jump in oil prices mostly reflects the market jitters as unrest escalates in Kazakhstan and the political situation in Libya continues to deteriorate and sideline oil output,” Rystad Energy analyst Louise Dickson said.

Moreover, supply additions from the Organization of Petroleum Exporting Countries, Russia and allies, together called OPEC+, are not keeping up with demand growth.

OPEC’s output in December rose by 70,000 barrels per day from the previous month, versus the 253,000 bpd increase allowed under the OPEC+ supply deal, which restored output that was slashed in 2020 when demand collapsed under Covid-19 lockdowns.

Production in Libya has dropped to 729,000 barrels per day, down from a high of 1.3 million bpd last year, partly due to pipeline maintenance work.

Wang Xiao, lead researcher from Guotai Junan Futures, said low oil inventory in Europe and America was also supporting market sentiment. 

“But overall, the price rally stokes inflation concerns, which could weigh on any further oil price gains.”