Oil Prices Slightly Rise as Demand Holds Ground

December 31, 2021
Oil Prices fall

By Adedapo Adesanya

Oil prices rose slightly on Thursday on expectations that fuel demand held up despite soaring Omicron coronavirus infections, pushing the Brent higher by 9 cents or 0.24 per cent to $79.32 per barrel as the West Texas Intermediate (WTI) crude rose 43 cents or 0.56 per cent to sell at $76.9 per barrel.

Market analysts noted that even as the COVID-19 variants – Delta and Omicron and all manner of lockdowns and travel restrictions have impacted the market, the demand for oil has remained relatively firm.

Preliminary data also showed that December indicated that there was strong demand for black gold.

The market is now focusing on whether the improved demand will translate to the Organisation of the Petroleum Exporting Countries and allies (OPEC+) adding incrementally to production.

OPEC+ will meet on January 4 to decide whether to continue increasing output in February.

However, Saudi Arabia’s King Salman said on Wednesday that the OPEC+ production agreement was needed for oil market stability and that producers must comply with the pact while another member of the group, Iraq said it would support sticking to existing OPEC+ policies to raise output by a combined 400,000 barrels per day in February.

However, oil prices came under pressure as the world’s top importer China cut the first batch of crude import allocations for 2022.

The Chinese government, intent on reforming the independent refining sector and cracking down on tax evasion and illicit practices at the teapots, is now allowing its independent refiners to import 109 million tons of crude oil in the first batch for 2022.

This is down by 11 per cent compared to the first batch of quotas granted for 2021, suggesting that China is now favouring giving quotas to the newer and more sophisticated private refineries as it cracks down on smaller and more polluting independent refiners, some of which are being investigated over alleged irregular tax and trade practices.

Also, health experts warned Americans to prepare for severe disruptions in the coming weeks, with infection rates likely to worsen amid increased holiday travel, New Year celebrations and school reopenings following winter breaks.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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