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Oil prices were fringed on Friday and were on track to post a second straight yearly gain, although tight supplies already marked the year due to the Russia-Ukraine conflict, a strong dollar, and diminishing demand from the world’s top crude importer, China.
Brent crude oil futures hiked 44 cents, or 0.5%, to $83.90 a barrel by 0138 GMT after defraying 1.2% down in the previous session.
West Texas Intermediate (WTI) crude was at $78.88 a barrel, up 48 cents (0.6%), after closing lower at 0.7% on Thursday.
Brent is set to close in 2022 with a 5.76% gain after rising 50.2% in 2021. Prices streamed in March to a peak of $139.13 a barrel, a level that was not seen since 2008 after Russia stormed Ukraine and stimulated supply and energy security analysis.
However, the WTI is on track to hike by 4.5% in 2022, following a 55% gain last year.
Ewa Manthey, the Commodities Analyst at ING, London School of Economics and Political Science, said, “This year has been an extraordinary year for commodity markets with supply risks leading to increased volatility and elevated prices.”
“Next year is set to be another year of uncertainty, with plenty of volatility,” she added.
Oil prices swooped quickly in the second half of this year as central banks worldwide spiked interest rates to fight inflation and surged the U.S. dollar. That made dollar-baptized commodities a more costly investment for other currency holders.
Meanwhile, China’s zero-COVID restrictions, which were only eased in December, distorted oil demand recovery hopes at the world’s No. 2 consumer. While China is all set to recover in 2023, a boost in COVID cases in the country and global recession analysis are clouding the demand for commodities outlook.
John Driscoll, Consultancy Director at JTD Energy Services, said, “The recent easing of travel restrictions was expected to boost oil demand; however, the sharp increase in COVID cases in China has raised serious concerns over a potential global outbreak.”
While looking upfront at supplies, western sanctions will push Russia to deflect more crude and refined items exported from Europe to Asia.
Whereas, in the U.S., the output growth in top oil-producing states has relaxed despite higher prices. The latest report by the Federal Reserve Bank of Dallas found that inflation, supply chain barriers, and economic unreliability have led bigwigs to lower their expectations.
- Published By Team Timeswire