29th December, 2021
Global oil prices rose by more than 1% on Wednesday, and the price of Brent crude exceeded $80 per barrel first time since November 26, according to trading data.
As of 15:50 GMT, the price of March futures for Brent crude oil grew by 1.58% to $79.93 per barrel, exceeding $80 for minutes earlier. February WTI futures were trading up 1.5% at $77.14.
Oil prices rose after U.S. government data showed crude and fuel inventories fell, offsetting worries that rising coronavirus cases might reduce demand.
Crude inventories fell by 3.6 million barrels in the last week to 420 million barrels, compared with analysts’ expectations in a Reuters poll for a 3.1 million-barrel drop.
U.S. gasoline stocks fell by 1.5 million barrels in the week to 222.66 million barrels, compared with analysts’ expectations in a Reuters poll for a 0.5 million-barrel rise.
Distillate stockpiles fell by 1.7 million barrels in the week to 122.43 million barrels, versus expectations for a 0.2 million-barrel rise, the EIA data showed.
Oil prices have been underpinned by Ecuador, Libya and Nigeria declaring forces majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns. read more
Russian Deputy Prime Minister Alexander Novak said that the OPEC+ group of producers has resisted calls from Washington to boost output because it wants to provide the market with clear guidance and not deviate from policy on gradual increases to productions.
Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to proceed with a planned production increase of 400,000 barrels per day in February.
At its last meeting OPEC+ stuck to its plans to boost output for January despite the spread of the Omicron variant.
2021 is proving to be a good year for the oil industry, after beginning the year at $52 a barrel.
Brent crude rose as high as about $86 per barrel before tailing off.
Forecasters say prices could resume their upward path in 2022 unless supply increases by more than expected.
Bank of America researchers estimate Brent will average $85 a barrel in 2022, due to low inventories and a lack of spare capacity.
The unknown is the Omicron coronavirus variant, as numerous countries have reimposed travel curbs which will hurt the aviation industry and consumption.
“If this is another wave like the ones we’ve seen before then it is a negative hit to economic growth in the first quarter of 2022,” said Damien Courvalin, head of energy research at Goldman Sachs.
“But if there is a subsequent recovery, oil demand, which briefly touched pre-COVID levels in early November, would then be at new record highs for most of 2022.”