Energy News Today

Crude prices post biggest weekly gain since August

Commodity prices are recovering from their steep drop as concerns ease over the omicron variant of the COVID-19 virus.

West Texas Intermediate on the New York Mercantile Exchange rose four of five trading days, starting the week with a $3.23 gain and shaking off a $1.42 drop Thursday to post an 8.2 percent increase for the week. That’s the biggest gain since August. WTI rose 73 cents to close at $71.67 Friday, up from $69.49 at Monday’s close. The posted price ended the week at $68.15, according to Plains All American.

Natural gas prices spent the week below the $4 per Mcf after Monday’s 47-cent drop but prices managed to rise three of five trading days, including an 11-cent increase Friday. Natural gas futures at Henry Hub ended the week at $3.925 per Mcf, up from $3.657 at Monday’s close.

“This was a positive week after the Black Friday/Omicron drop and we continue to see positive signs in terms of global demand recovery,” Jason Modglin, president of the Texas Alliance of Energy Producers, told the Reporter-Telegram by email. “Our biggest fear is overreaction from governments imposing trading restrictions or locking down economies. It is a testament to our producers and the pro-business/pro-consumer regulatory environment that Texas has led the US recovery in oil and natural gas production.”

Concerns about the omicron variant and its impact on global oil demand did prompt the US Energy Information Administration to lower its crude oil price forecast. In its December Short-Term Energy Outlook, the agency lowered its price for Brent, the global benchmark, from $78 as forecast in the November outlook to $73 a barrel in the first quarter of 2022. WTI, the US benchmark, typically trades about $5 lower, putting it at around $68 a barrel.

The agency also significantly reduced its expected global crude inventory drawdowns from December 2021 to February 2022 to an average 170,000 barrels per day, down from 420,000 barrels a day in the November outlook. Annual inventory buildups, which the EIA said will put downward pressure on oil prices next year, is forecast to be 480,000 barrels a day next year.

The EIA said global oil production will rise by 5.3 million barrels a day to 100.9 million barrels next year, with non-OPEC production rising 3 million barrels, led by the US, Russia and to a lesser extent Brazil. US petroleum production is forecast to rise by 1.3 million barrels a day to 20.1 million barrels a day in 2022.

Read More: Crude prices post biggest weekly gain since August

2021-12-10 20:03:04

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