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Oil posts biggest annual gain since at least 2016

CommoditiesDec 31, 2021 04:10PM ET
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© Reuters. FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019. REUTERS/Christian Hartmann/File Photo

By Jessica Resnick-Ault

NEW YORK (Reuters) - Oil prices fell on Friday but were set to post their biggest annual gains since at least 2016, spurred by the global economic recovery from the COVID-19 pandemic slump and producer restraint, even as infections reached record highs worldwide.

Brent crude futures settled down $1.75, or 2.2%, at $77.78 a barrel. U.S. West Texas Intermediate (WTI) crude futures dropped $1.78, or 2.31%, to $75.21 a barrel.

Brent ended the year up 50.5%, its biggest gain since 2016, while WTI posted a 55.5% gain, the strongest performance for the benchmark contract since 2009, when prices soared more than 70%.

Both contracts touched their 2021 peak in October, with Brent at $86.70 a barrel, the highest since 2018, and WTI at $85.41 a barrel, the highest since 2014.

"This year was a story of global recovery for petroleum products," said John Kilduff, a partner at Again Capital Management in New York.

"The oil market continues to be highly reactive to developments on the pandemic front - we're not out of the woods yet, but we are close to pre-pandemic demand levels."

Global oil prices are expected to rise further next year as jet fuel demand catches up.

"We've had Delta and Omicron and all manner of lockdowns and travel restrictions, but demand for oil has remained relatively firm," said Australian brokerage firm CommSec's Chief Economist Craig James.

"You can attribute that to the effects of stimulus supporting demand and restrictions on supply."

However, after rising for several straight days, oil prices stalled on Friday as COVID-19 cases soared to new pandemic highs across the globe, from Australia to the United States, stoked by the highly transmissible Omicron coronavirus variant.

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

A Reuters survey of 35 economists and analysts forecast Brent crude would average $73.57 a barrel in 2022, about 2% lower than the $75.33 consensus in November.

It is the first reduction in the 2022 price forecast since the August poll.

Easing production outages in Nigeria and Ecuador weighed on prices earlier this week.

With oil hovering near $80, the Organization of the Petroleum Exporting Countries, Russia and allies - together called OPEC+ - will probably stick to their plan to add 400,000 barrels per day of supply in February when they meet on Jan. 4, four sources said.

GRAPHIC - Oil prices head for biggest yearly gains since 2009

https://fingfx.thomsonreuters.com/gfx/ce/zdpxoqonzvx/Pasted%20image%201640920920434.png

Oil posts biggest annual gain since at least 2016
 

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Comments (6)
Marcus Bennett
Marcus Bennett Dec 31, 2021 2:03PM ET
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oil companies become more open minded in the solar energy economy. In 2022 we will see more #solarenergy projects happening in smaller communities community #NewTown
Devin Nathaniel
Devin Nathaniel Dec 31, 2021 9:34AM ET
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covid bullish too. inflation with economic down. WOW
Ac Tektrader
Ac Tektrader Dec 31, 2021 4:28AM ET
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lessco still showing he doesn't understand how the crude market operates or how and why pricing is affected. presidents have little long-term effect on oil prices, buyers and producers do. I've over simplified the statement for lessco's benefit.
dee money
dee money Dec 31, 2021 2:34AM ET
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bullish
Max German
MaxiGE Dec 31, 2021 1:51AM ET
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with fake inventories every week what u expect even with xian a typical industrial province in xian in lockdown where its also forbidden to drive cars, they manage to fix draws "biggest annual since 2009" yea on same reasons inflation and fake inventories this worked well
perplexed76 .
perplexed76 . Dec 31, 2021 1:36AM ET
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12.8 mln - new high in U.S. production. Oil "investors" keep angry silence
 
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