Oil closes the week gaining 5% despite Friday’s price drop

Oil closes the week gaining 5% despite Friday’s price drop

The black liquid ended the week very bullish despite Friday’s dip where longs in the market took some profit after four days of bullish momentum.

The week concluded is still a big one for oil bulls due to the Organization of Petroleum Exporting Countries and its allies (OPEC+) decision to raise output in a market still battling with the impact of the Omicron COVID-19 variant.

Other factors weighing in on price is the supply concerns from the unrest in Kazakhstan, the outages in Libya and Friday’s U.


jobs report that missed expectations and its potential impact on Federal Reserve policy.

The global benchmark, the Brent crude oil ended the week gaining 5.

2% to currently trade $81.

75 a barrel, while the U.


benchmark, the West Texas Intermediate (WTI) crude ended the week gaining 5%, to currently trade $78.

90 a barrel.

Both benchmarks are at their highest levels since late November 2021.

In Kazakhstan’s main city Almaty, security forces appeared to be in control of the streets and the president stated that constitutional order had mostly been restored, a day after Russia sent troops to put down an uprising.

Production in Libya has dropped to 729,000 barrels per day from a high of 1.

3 million bpd last year, partly due to pipeline maintenance work.

A barrel of oil for delivery in March was selling at a discount of as much as 70 cents to a barrel for delivery in February, the highest since November.

Another factor affecting oil prices this week is an underwhelming U.


jobs report for December, with just 199,000 positions being added versus expectations for 450,000.

However, the U.


is near the Federal Reserve’s definition of “maximum employment” with a jobless rate just shy of 4%.

As previously mentioned, global producer alliance OPEC+ was also keeping a tight leash on output despite agreeing to a 400,000-barrel-per-day increase for February, a trend it has kept to since August.

Supply additions from the cartel are not keeping up with demand growth, as demand for crude returned to pre-pandemic levels.

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

EIA data reveals that crude inventories in the United States, the world’s top consumer, have fallen for six consecutive weeks by the end of the year to their lowest since September.

This is expected to decline further as extreme frigid weather in North Dakota and Alberta is expected to hurt production in the region and lead operators to shut the 590,000 bpd Keystone Pipeline for a short period of time earlier in the week.

What they are saying
Ed Moya, analyst at online trading platform OANDA stated, “While optimism is high that the Omicron variant’s impact on the crude demand outlook will be short-lived, it is too early to be optimistic that the worst of this wave is over.

With the U.


still seeing parts of the country struggling with hospitalizations and Germany considering fresh curbs, and as China continues to resort to harsh lockdowns, the short-term demand outlook still has a handful of headwinds.

Commerzbank analyst Carsten Fritsch stated, “The concerns about a massive slump in oil demand have faded now that it has become clear that Omicron leads to milder forms of the disease than previous variants of the virus, meaning that massive mobility restrictions are not likely.

Ed Moya stated, “The oil market remains very tight and that should remain the case for the first half of the year as the growth outlook across the U.


and Europe remains very strong.

Ime N
Oil closes the week gaining 5% despite Friday’s price drop

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