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Oil settles higher on 2022 demand optimism

Commodities Jan 03, 2022 03:25PM ET
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© Reuters. FILE PHOTO: Oil storage containers are seen, amid the coronavirus disease (COVID-19) pandemic, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson

By Laura Sanicola

(Reuters) - Oil settled higher on Monday on hopes of further demand recovery in 2022, despite OPEC+ looking set to agree to another output increase and persistent concerns about how rising COVID infections might affect demand.

OPEC and its allies, or OPEC+, are expected on Tuesday to agree to the output hike.

The Omicron coronavirus variant has brought record case counts and dampened New Year festivities worldwide, with more than 4,000 flights cancelled on Sunday.

"The monthly OPEC + meeting that will be developing during the next couple of days is more likely to prove bullish than bearish since several of the OPEC members are having difficulty achieving assigned quotas," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Brent crude settled up $1.20, or 1.5%, at $78.98 a barrel at 12 p.m. EST (1700 GMT), having earlier risen as high as $79.05. U.S. West Texas Intermediate (WTI) crude settled up 87 cents at $76.08 a barrel.

"Infection rates are on the rise globally, restrictions are being introduced in several countries, the air travel sector, amongst others, is suffering, yet investors' optimism is tangible," said Tamas Varga of oil broker PVM.

Many U.S. schools that would normally welcome students back to classrooms on Monday are delaying their start dates, scrambling to test pupils and teachers and preparing, as a last resort, to return to remote learning as record numbers of COVID-19 cases from the Omicron variant sweep the country.

Oil gained some support from an outage in Libya. Oil output will be cut by 200,000 barrels per day for a week due to pipeline maintenance.

Last year, Brent rose 50%, spurred by the global recovery from the COVID-19 pandemic and OPEC+ supply cuts, even as infections reached record highs worldwide.

Some see more gains in 2022.

"Crude and oil product prices should benefit from oil demand moving above 2019 levels," said a report from UBS analysts including Giovanni Staunovo. "We expect Brent to rise into a $80–90 range in 2022."

Oil settles higher on 2022 demand optimism
 

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Comments (5)
Alan Rice
Alan Rice Jan 03, 2022 4:25PM ET
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Yeah. Samo ,samo - LIFE on earth: being devoured by humanity.
Andrew Ulferts
Andrew Ulferts Jan 03, 2022 4:23PM ET
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Dont tell Reuters (fake news machine) but my drilling stock, ICD, did over 13% today. Almost kept up with Tesla.
Andrew Ulferts
Andrew Ulferts Jan 03, 2022 7:59AM ET
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The CEO of Reuters is on the Pfizer board.
Barani Krishnan
Barani Krishnan Jan 03, 2022 7:59AM ET
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It isn't a revelation or a scoop when it's on Wiki, Andrew. And by the way, he's EX chief executive of Reuters, if you need to know :) : James C. Smith (born 1959) is an American business executive. He started his career as a journalist and editor, joined Thomson Newspapers in 1987 and subsequently held management positions such as head of Thomson Newspapers in North America and chief operating officer (COO) of the Thomson Corporation.After serving as CEO of Thomson Reuters' professional division, Thomson Reuters named him COO in 2011and CEO in January 2012. In February 2020, Steve Hasker succeeded Smith as President and CEO of Thomson Reuters. Involved with initiatives such as the international business council of the World Economic Forum, he is also on the board of Pfizer.
Ezeafulukwe Kingsley Oluebube
Ezeafulukwe Kingsley Oluebube Jan 03, 2022 7:59AM ET
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🤣🤣🤣
Alan Rice
Alan Rice Jan 03, 2022 7:59AM ET
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Very interesting. Welcome to (Earth??).
Andrew Ulferts
Andrew Ulferts Jan 03, 2022 7:59AM ET
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Barani Krishnan Thx. World Economic Forum (Evil globalist power brokers) is an added bonus! You are who you hang out with.
Ezel Mete
Ezel Mete Jan 03, 2022 5:26AM ET
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2 hours ago you made an article saying that Omicron caused 4000 flight cancellations. now the fears ease? Reuters just make these titles up as they go
Daniel Hernandez
Daniel Hernandez Jan 03, 2022 5:26AM ET
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yeah Reuters acts bipolar with their commentary
Barani Krishnan
Barani Krishnan Jan 03, 2022 5:26AM ET
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Ezel, do you have trouble understanding this?: "Infection rates are on the rise globally, restrictions are being introduced in several countries, the air travel sector, amongst others, is suffering, yet investors' optimism is tangible," said Tamas Varga of oil broker PVM. "It seems that the current strain produces less severe symptoms than its predecessors, which might just help us to struggle through the fourth wave of the pandemic." (I'm not sure how much clearer this can be explained as to why oil might go higher despite lingering concerns over the virus)
Barani Krishnan
Barani Krishnan Jan 03, 2022 5:26AM ET
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Daniel Hernandez, don't shoot the messenger
Barani Krishnan
Barani Krishnan Jan 03, 2022 5:26AM ET
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New Jazenevd, that's exactly what Varga of PVM is saying in this story, that oil investors are reacting differently to the virus situation than regular folk. Bashing journalists has become fashionable even when they do their jobs competently.
 
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