Crude oil prices surged as demand in the US rises and Fed announces three hikes in interest rate in 2022.
At 1210 hours GMT on Thursday, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.98 (+1.33 percent) to reach $74.86 a barrel. Similarly, the US West Texas Intermediate (WTI) price reached $71.90 a barrel, up by $1.03 (+1.45 percent).
The price for Opec Basket was recorded at $74.28 a barrel with an increase of 0.34 percent, Arab Light was available at $75.95 with a 2.39 percent increase, and the price of Russian Sokol jumped to $76.19 with an increase of 2.27 percent.
The weekly oil inventory report of the Energy Information Administration (EIA) – a principal agency of the U.S. Federal Statistical System responsible for collecting, analysing, and disseminating energy information – showed demand for petroleum products hit a record high, crude exports bounced back and national crude stocks posted a larger-than-expected draw. Total US commercial crude stocks fell 4.58 million barrels to 428.29 million barrels in the week ended December 10, the EIA said — the biggest one-week draw since the week ended September 10. The draw put nationwide crude stocks at an eight-week low and left them 7.5 percent behind the five-year average for this time of year.
Meanwhile, the Federal Reserve said it would end its pandemic-era bond purchases in March and begin raising interest rates as unemployment remains low and inflation has climbed.
However, the Omicron variant of coronavirus threatens to dent oil consumption globally. Governments around the world, including most recently Britain and Norway, are 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.
However, OPEC said that the first quarter of next year is expected to be slightly sluggish. On the other hand, new-well oil production per rig has gained some serious ground over the last three years, increasing nearly 85 percent since the start of 2019, EIA data showed. According to the data, new-well oil production per rig rose to 1,142 barrels per day in December, and is expected to stay close to that figure in January, at 1,140.
