Oil prices rose above $ 84 on international markets on Wednesday, driven by producer problems with increased supplies and estimates that the spread of omicron infection will not hamper a recovery in demand from the corona crisis.
In the London market, the price of a barrel in the afternoon was a plus of 47 cents compared to the previous closing and amounted to 84.19 dollars. Yesterday it closed the trade at a plus of $ 2.85.
The US market traded at 66 cents a barrel today, at $ 81.88. Yesterday it closed trading at $ 2.99.
The market yesterday focused on indications that producers are failing to increase oil supply and on estimates that the spread of omicron coronavirus infection will not hamper the recovery of global demand from the effects of the corona crisis.
US Federal Reserve Chairman Jerome Powell said on Tuesday that the current wave of covida-19 should cause only “short-term” consequences in the US economy, the world’s largest oil consumer.
The economy is ready to tighten monetary policy, Powell concluded.
Price support was also provided by the weaker dollar, which makes oil cheaper for customers with other currencies and thus supports demand.
Prices in contracts with delivery deadlines next month are currently around $ 4.2 more in London than in contracts with delivery deadlines in the second half of the year, signaling that supply is currently tight, Reuters points out.
Leading oil producers in the Organization of the Petroleum Exporting Countries (OPEC) and their allies, led by Russia, recently decided to increase production by 400,000 barrels per day in February, reducing coordinated supply cuts to three million barrels per day.
At one time, they cut supplies by nine million barrels a day to adjust to collapsing demand in the pandemic.
Although OPEC + is raising its target level of production from month to month, some countries are failing to take full advantage of the quotas allocated to them due to technical difficulties.
“If China’s economy doesn’t slow down sharply and omicron disappears, and given OPEC + ‘s apparently limited ability to boost production, the price in London could rise to $ 100 in the first quarter, and maybe sooner,” said Jeffrey Halley of Oanda. .
“There are a lot of variables in that sentence, and the biggest threat is omicron in China, India and Indonesia,” Halley added.
Meanwhile, refinery margins for jet fuel in Europe have returned to pre-pandemic levels amid reduced global air supply and recovery.
Market sentiment was also supported by the fact that U.S. crude oil inventories fell 1.1 million barrels last week, according to trade sources citing a report by the U.S. Petroleum Institute (API).
Official U.S. government data will be released during the day.
The Washington government on Tuesday raised its estimate of U.S. oil demand this year to 840,000 barrels a day, from 700,000 barrels a day so far.
OPEC said in a separate report that a barrel of its members’ oil baskets cost $ 82.13 on Tuesday, up 38 cents from the previous trading day.