Wednesday, January 26, 2022

Oil holds tight near $85/bbl on strong demand prospects

Oil pump jacks are seen at the Vaca Muerta shale oil and gas reserves in the province of Neuquén, Patagonian province of Argentina on January 21, 2019. Reuters/Augustin Markarian/File photo

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  • Mild Omicron Effect, Colder North America Weather Support Prices
  • US crude oil reserves fall to 2018 lows – EIA
  • Gasoline inventories increased last week – EIA

LONDON, Jan 13 (Reuters) – Oil prices edged lower on Thursday but remained at a 2-month high, with Brent crude trading near $85 a barrel, buoyed by hopes that a strong economic recovery could drive demand. would boost, but rising US inventories and high inflation limited gains.

Brent crude futures fell 11 cents, or 0.1%, to $84.56 a barrel as of 1304 GMT.

US West Texas Intermediate (WTI) crude futures were down 27 cents at $82.37 a barrel.

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Oil prices rose by more than 50% in 2021 and some analysts predict the trend will continue this year, predicting that a lack of production capacity and limited investment could push crude to $90 or even above $100. dollars per barrel. read more

Commerzbank said, “The main factors driving prices are … as generally positive market sentiment eases Omicron’s concerns and expects continued dynamic economic growth.”

Cold weather in North America also supported the prices.

“It will be interesting to see if the temperature starts rising as spring approaches,” said Tamas Varga, analyst at PVM Oil.

However, rising US fuel inventories and high inflation in the world’s largest economy weighed on last week.

US Energy Information Administration (EIA) data on Wednesday showed fuel demand from Omicron fell, with gasoline stockpiles rising by 8 million barrels in the week to January 7, compared with a 2.4 million-barrel rise from analysts’ expectations. are supposed to. read more

“Indeed, the weekly EIA report was less sharp than the headline number, as total crude inventories declined by 4.8 million barrels, but were more than offset by stock builds in refined products,” Citi said in a note. “

The bank said the decline in crude inventories “may be related to year-end tax issues” on oil stocks onshore in Texas and Louisiana.

Producers are paving the way for faster production by expanding well completions in the nation’s top shale oil fields, West Texas’s Permian Basin and New Mexico, according to research data, so U.S. supplies are poised to increase. read more

Separately, concerns about inflation are pressing the Federal Reserve to speed up the deadline for raising interest rates, further impacting the markets. read more

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Reporting by Ahmed Ghadar and Rowena Edwards; Additional reporting by Sonali Paul and Florence Tan; Editing by Frank Jack Daniels

Our Standards: Thomson Reuters Trust Principles.

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