Oil prices fell in trading today, Friday, by about 1%, but they are heading to achieve weekly gains after rising during the past 3 sessions.
The decline in oil prices comes amid light trading in the market today, Friday, coinciding with the Christmas holidays, with traders looking forward to the next steps by OPEC +, and the impact of the Omicron mutator on oil demand.
Oil Prices Today
Brent crude futures prices – for February 2022 delivery – fell by 0.92%, recording $76.14 a barrel.
At the same time, no trading was conducted on West Texas Intermediate crude, as US markets are closed today, Friday, due to the Christmas holiday.
And Brent crude and West Texas achieved gains by 4.5% and 4.1%, respectively, during this week’s trading, before the Christmas holidays.
Oil prices rebounded this week as concerns eased about the impact of the highly contagious omicron mutant on the global economy, as early data suggests it is causing a milder level of illness.
“Moderate Omicron’s rally may continue in January, but the reality will affect February I think, as the end of the Fed taper approaches,” said Oanda chief analyst Jeffrey Haley.
The Federal Reserve confirmed last week that it will end its pandemic-era bond purchases in March, paving the way for three rate hikes that most Fed policymakers now believe will be necessary next year.
“It’s a typical holiday market,” said Chiyuki Chen, senior analyst at Snord Trading, explaining that “with concerns about the implications of Omicron’s fading, market focus has shifted to the next step by OPEC+ at its January meeting.”
The Organization of Petroleum Exporting Countries (OPEC) and its allies from abroad led by Russia, in the OPEC + alliance, are likely to stick to the decision to increase oil production by 400,000 barrels per day each month at its next meeting as long as oil prices remain above $ 70 a barrel.
The group is scheduled to meet on January 4, to study market conditions and approve a production plan during February.
Russian Deputy Prime Minister Alexander Novak said on Friday that Russia believes that oil prices are unlikely to change significantly next year with demand only recovering to pre-pandemic levels by the end of 2022.
However, some investors remained cautious amid the high incidence of infection, with the outbreak of the new Corona mutant Omicron in most countries of the world, as health experts warned that the battle against the Corona mutant is not over yet, despite the two drug makers saying that their vaccines are protected against it, and on the Despite indications that it has fewer risks than hospitalization.
Coronavirus infections have risen wherever Omicron has spread, leading to new restrictions in many countries, including Italy and Greece, and record numbers of new cases.
This comes in conjunction with the increase in the number of oil and gas rigs in the United States, which represents more pressure on the oil market.
Oil and gas rigs operating in the United States surged to their highest levels since April 2020 in the last week, according to energy services company Baker Hughes, with a total of 586, which heralds an increase in production in the coming months.
Liquefied Gas Prices
“But given rising natural gas prices in Europe and Asia, oil is likely to maintain a positive tone on expectations that some industries will switch fuels from higher-priced gas to oil,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities. Reuters.
Asian LNG prices jumped this week, despite tepid Asian demand, as upside risks in the European gas market remain the main driver of price action.
Global demand for oil returned again in 2021, as the world began to recover from the Corona virus pandemic, and total global consumption is likely to reach a new record level in a year, despite efforts to reduce fossil fuel consumption to mitigate climate change.