The discovery of a new coronavirus variant named Omicron triggered global alarm on Friday as countries rushed to suspend travel from southern Africa, and the equity and commodity markets on both sides of the Atlantic suffered their most significant drop in more than a year. The World Health Organization said Omicron might spread more quickly than other forms of the virus, and preliminary evidence suggested an increased risk of reinfection.
Crude futures moved sharply lower on Friday as the markets weighed the impacts of new pandemic lockdowns in Europe and a stronger US dollar. WTI settled down $2.91 at $76.10, and Brent moved $2.35 lower to settle at $78.89. Oil demand in most major European economies continued to fall, as governments react to rising COVID-19 cases in most countries while supply chain disruptions continue to drag on activity.
Prices notched the longest stretch of weekly losses since March, with President Biden keeping investors guessing about whether he’ll act to tame higher energy prices that are driving a surge in inflation. Futures in New York fell 1% to close at $80.79 on Friday, and London closed at $82.17. Near the end of the session, White House Press Secretary Jen Psaki declined to say whether Biden plans to release oil from the Strategic Petroleum Reserve. Biden has been weighing moves that include an SPR release to bring down the cost of gasoline at the pump.
The OPEC+ group of major producers agreed on Thursday to stick to their plan to raise oil output by 400,000 b/d from December, ignoring calls from President Biden for extra output to cool rising prices. This decision led to a price rebound on Friday, leaving Brent crude finishing the week at $82.74 a barrel. US WTI closed at $81.27. Following the OPEC+ announcement US Energy Secretary Granholm said President Biden is considering a release from the US’s Strategic Petroleum Reserve (SPR) as a possible move to reduce gasoline prices in the US. The SPR is the world’s largest supply of emergency crude oil and it currently holds around 600 million barrels.
Futures rose above $84 a barrel on Friday, within sight of a multi-year high hit last week. Expectations that OPEC and its allies will keep supply tight countered a weekly rise in US inventories and the prospect of more Iranian exports. Oil posted a monthly gain for October of 11% on signs that consumption is outpacing supply and declining stockpiles. New York futures closed at $83.57 and London at $83.72. Last month’s advance shows the impact of an ongoing shortage of natural gas, which has boosted demand for oil products. At the same time, rising margins signal that crude consumption will remain strong as refiners continue to process more oil to meet demand. That could mean that global oil stockpiles will continue to fall in the coming months.
Futures rallied last week on concerns that rising consumption is racing ahead of supply. Oil prices rose early on Thursday, with Brent Crude rallying to $86.10—the highest price since October 2018. New York crude settled at a fresh seven-year high on Wednesday and closed Friday at $83.76. According to government data, US crude inventories fell by 431,000 barrels the week before last compared with a Bloomberg survey that had forecast a fourth weekly increase. Gasoline and distillate inventories also decreased more than expected. The market has tightened significantly as coal and natural gas shortages drive greater crude consumption, underpinning a rally in prices.
US crude futures posted an eighth straight weekly gain, the longest stretch of advances since 2015. Brent crude topped $85 a barrel in London for the first time since 2018, the latest milestone in a global energy crisis that has seen prices soar. The global benchmark rose above that level in intraday trading but did not settle above it on Friday. West Texas Intermediate for November settlement rose 97 cents to settle at $82.28 a barrel. Brent for December delivery added 86 cents to settle at $84.86 a barrel. The shortage of gas and coal is triggering extra demand for oil products from the power market. It’s also depleting stockpiles: the biggest US storage hub at Cushing recorded a considerable supply decline for this time of year.
West Texas Intermediate crude closed above $80 a barrel on Monday for the first time since late 2014 as a growing power crisis from Europe to Asia boosts demand for oil ahead of winter.
rices rose for the fifth straight week with the global energy crunch set to boost demand for crude as stockpiles decline from the US to China. Futures in New York gained 2.8% last week. The global benchmark Brent settled at the highest in nearly three years for the second day in a row on Friday. Global onshore crude supplies sank by almost 21 million barrels last week, led by China, while US inventories are near a three-year low.
Brent futures dipped on Friday but held above $75 a barrel, remaining on track for weekly gains of more than 3% thanks to the slow recovery in output after two hurricanes in the Gulf of Mexico. Brent crude futures fell 27 cents, or 0.36%, to $75.40 a barrel. West Texas Intermediate (WTI) crude futures closed at $72.22 after settling unchanged in the previous session. Hurricane Ida is now officially the most devastating hurricane ever in terms of oil production disruption, and experts expect the outages to last throughout September.
