Oil posted a fourth straight weekly gain, its longest winning streak since October, on signs that the market is tightening as global consumption withstands the effects of the Omicron variant of SARS-CoV-2.
West Texas Intermediate (WTI) for February delivery rose 2.07 percent to US$83.82 a barrel, up 6.24 percent on the week.
Brent crude for March delivery gained 1.88 percent to US$86.06 a barrel, increasing 5.27 percent from a week earlier.
Oil has made a good start to the year, underscored by depleting US inventories and product demand at multiyear highs.
“The picture for oil is getting better because people are looking past the Omicron variant and looking to reopening and a rebound in activity, much like we saw coming out of August,” US Bank Wealth Management senior investment strategist Rob Haworth said.
Crude has clawed back most of the losses it recorded late last year, which were driven by Omicron and White House-led releases from national oil reserves. Although it has proved to be fast-spreading, the variant also appears to be milder, particularly among vaccinated people, lessening the impact on energy consumption.
Demand in India is poised to weather the latest scare, Hindustan Petroleum chairman Mukesh Kumar Surana said.
The International Energy Agency said earlier this week that global oil demand has turned out to be larger than expected.
Oil prices are also finding support from physical markets — where real barrels are bought and sold — as supplies change hands at healthy premiums. There is also global strength in the diesel sector.
With prices climbing higher, traders are watching whether OPEC and its allies deliver their planned monthly production increases in output in full.
Optimism about the demand outlook is reflected in the market’s bullish backwardated pricing structure, with near-term futures above those further out.
The spread between WTI’s two nearest December contracts is now well above US$6 a barrel, up from less than US$3 early last month.
Despite the broadly positive mood, there are notes of caution. China has maintained its strict approach to the virus, while India and some other Asian countries have introduced partial curbs, which has caused a drop in mobility.
Additional reporting by staff writer
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