Oil starts new year on positive note, pandemic worries curb gains. WTI, Brent rise as markets start new year on bullish note. Analysts lower price forecast as Omicron curbs travel, Reuters reports.
Oil prices rose on Monday as the market kicked off 2022 on a positive note, although concerns over demand waning due to rapidly spreading COVID-19 pandemic limited gains. Brent crude added 67 cents, or 0.86%, to $78.45 a barrel, as of 0102 GMT. U.S. West Texas Intermediate crude futures gained 77 cents, or 1.02%, to $75.98 a barrel.
U.S. health experts warned Americans to prepare for severe disruptions in coming weeks, with infection rates likely to worsen amid increased holiday travel, New Year celebrations and school reopenings following winter breaks. U.S. crude is projected to average $71.38 per barrel in 2022, versus the previous month’s $73.31 consensus. U.S. energy firms added oil and natural gas rigs for a record 17 months in a row as higher prices lured some drillers back to the wellpad after last year’s coronavirus-driven decline in demand, Reuters said.
U.S. crude oil production rose to 11.47 million barrels per day in October, up 6% from a month earlier, as output soared in the Gulf of Mexico as the region recovered from hurricanes, according to a monthly report issued on Thursday by the Energy Information Administration.
The oil and gas sector continued growing in fourth quarter 2021, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index – the survey’s broadest measure of conditions facing Eleventh District energy firms – remained elevated at 42.6, essentially unchanged from its third-quarter reading. Oil production increased at a faster pace, according to executives at exploration and production firms. The oil production index moved up from 10.7 in the third quarter to 19.1 in the fourth quarter. Similarly, the natural gas production index advanced seven points to 26.1.
A survey of 35 economists and analysts forecast Brent crude would average $73.57 a barrel in 2022, about 2% lower than $75.33 consensus in November. It is the first reduction in the 2022 price forecast since the August poll.
Last year, oil prices rose around 50%, spurred by the global economic recovery from the COVID-19 pandemic slump and producer restraint, even as infections reached record highs worldwide. Oil analysts have lowered their price forecasts for 2022 as the Omicron coronavirus variant poses headwinds to recovering fuel demand and risks a supply glut as producers pump more oil, a Reuters poll showed on Friday.
The Organization of the Petroleum Exporting Countries, Russia and allies – together called OPEC+ – will probably stick to their plan to add 400,000 barrels per day of supply in February when they meet on Jan. 4, four sources said. Commodity prices from energy and metals to agricultural products rebounded sharply in 2021, with power fuels leading the rally, driven by tight supplies and a strong economic recovery as COVID-19 vaccinations staved off widespread lockdowns, Reuters reports.