By Adedapo Adesanya
Brent crude returned to the $75 per barrel mark buoyed by easing concerns over the Omicron coronavirus variant’s impact on global economic growth and fuel demand.
On Friday, the price went up by 73 cents or 0.98 per cent to $75.15 per barrel, while the price of the West Texas Intermediate (WTI) crude futures also gained 73 cents or 1.03 per cent to trade at $71.67 per barrel.
Crude oil recorded six consecutive weeks of losses which worsened in the last week of November, shedding more than 15 per cent.
However, oil markets at large heaved a sigh of relief this week upon hearing that the Omicron variant of COVID-19 might not be that much of a potent demand disruption factor as previously feared.
With demand being largely stagnant and global crude inventories still well below the 5-year average, price continued its recovery.
But there remain several downside risks for global demand including weaker domestic air traffic activity in China, owing to tighter travel restrictions, and weaker consumer confidence after repeated small outbreaks.
This is coupled with potential bankruptcies of property giants Evergrande and Kansa still looming on the horizon.
On Thursday, rating agency, Fitch, downgraded property developers China Evergrande Group and Kaisa Group, saying they had defaulted on offshore bonds.
That reinforced fears of a potential slowdown in China’s property sector, as well as the broader economy of the world’s biggest oil importer.
A stronger Dollar, rising ahead of US inflation data, also weighed on oil prices.
Oil typically falls when the greenback firms because it makes oil more expensive for buyers holding other currencies.
On the other hand, soaring US inflation is adding to the bullish sentiment, largely counteracting the above-mentioned factors.
Market analysts warn that with the new virus in town threatening global demand and the Organisation of the Petroleum Exporting Countries and allies (OPEC+) moving ahead with its planned January oil output rise of 400,000 barrels per day, oil remains vulnerable to downside losses.
S&P Global Platts forecasts that Iran and Western powers will reach a nuclear deal in the first quarter, allowing more Iranian oil to return to the market by the end of next year.
There is also likely to be a rising call on oil from OPEC in mid-2022, the company said.
If there is no deal with Iran and there are supply disruptions, $100 oil becomes a possibility, it added.
Over in the US, the latest rig-count data from Baker Hughes implied a potential output increase, with the number of active US rigs drilling for oil up by four to 471 this week.
Modupe Gbadeyanka