MOSCOW (MRC) -- Oil prices edged higher on Tuesday but price gains were capped due to investor worries about oil demand after renewed restrictions were imposed in Europe and Asia amid a rise in coronavirus cases, reported CNBC.
Brent crude oil futures edged higher by 1 cent to USD74.40 a barrel by 0113 GMT, while US West Texas Intermediate (WTI) crude futures gained 1 cent to USD71.30.
“Energy traders don’t want to bet against OPEC+ but all the short-term risks from omicron to Fed tightening is proving to be very disruptive to the short-term outlook for oil prices,” said Edward Moya, senior analyst at OANDA.
“The virus spread across Europe is delivering a bigger hit than expected and when you calculate family gatherings for the holidays, the short-term outlook could get slashed over the next month.”
Governments around the world, including most recently Britain and Norway, were tightening restrictions to stop the spread of the omicron variant.
In China, major manufacturing province Zhejiang is fighting its first Covid-19 cluster this year, with tens of thousands of citizens in quarantine and virus-hit areas suspending business operations, cutting flights and cancelling events.
Still, the Organization of the Petroleum Exporting Countries raised its world oil demand forecast for the first quarter of 2022 and stuck to its timeline for a return to pre-pandemic levels of oil use, saying the Omicron coronavirus variant would have a mild and brief impact.
Supply meanwhile is expected to increase with the largest US shale basin’s output expected to surge to a record in January, according to a monthly forecast from the US Energy Information Administration on Monday.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC