NEW YORK: Oil prices ended higher in a back-and-forth session on Wednesday, maintaining a positive tone as investors no longer expect the Omicron coronavirus variant to derail global economic growth.
Brent crude futures settled at $75.82, up 38 cents, or 0.5 per cent. U.S. West Texas Intermediate crude ended at $72.36 a barrel, up 31 cents or 0.4 per cent, report agencies.
“Some of those Omicron oil demand-related concerns might have been too pessimistic, and hence with some positive news related to Omicron being released in recent days, oil prices recovered,” said Giovanni Staunovo, commodity analyst at UBS. The market had a muted reaction to U.S. weekly inventory figures. Crude stocks fell by 240,000 barrels and gasoline and distillate stocks increased as refiners picked up production.
At the same time, however, U.S. product supplied by refineries, a proxy for demand, hit 20.9 million barrels per day over the past four weeks - exceeding pre-pandemic rates of consumer use.
The market expects that supply will exceed demand by early 2022, due to rising U.S. production and ongoing supply additions from the Middle East.
Ultimately, the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, chose to maintain its schedule of boosting supply by 400,000 bpd every month - despite fears that the new variant would sap demand.