Oil prices were up above $78 per barrel this Monday, supported by tight supplies and hopes of a broader and continued recovery in 2022. The rise happened despite OPEC+ looking to agree on an output increase and the rising concern of the impact on the market of rising coronavirus cases.
Firstly, Brent crude rose 39 cents, 0,5% and settles at $78,17 per barrel. Earlier in the session, Brent rose to a peak of $79,05. At the same time, the US mix, the West Texas Intermediate, slipped 25 cents, 0,3%, and settled at $74,69.
Moreover, the Organization of Petroleum Exporting Countries and its allies, known as OPEC+ will meet on Tuesday to discuss an output hike. Such an output would rebalance the market, cooling down prices.
On the other hand, the coronavirus variant, the Omicron strain, has brought record case counts and dampened New Year festivities worldwide, with more than 4,000 flights canceled on Sunday.
Tamas Varga of oil broker PVM, said about the matter. “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.”
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Oil to keep rising during 2022
He also added. “In a nutshell, 2021 demonstrated that the war against the coronavirus is a winnable one although the path to victory is paved with unexpected twists and turns.”
Furthermore, according to Reuters, the rise in coronavirus cases also affected schools, as many in the US that would normally welcome students back to classrooms this Monday are delaying their classes’ start dates. Instead, they are preparing to return to a remote learning system, as Omicron cases hit record highs.
On the other hand, oil prices also gained some support after an outage in Libya. The country had to cut down 200,000 barrels per day for a week due to pipeline maintenance.
Finally, UBS analyst Giovanni Staunovo considers that there would be more gains for oil during 2022. “Crude and oil product prices should benefit from oil demand moving above 2019 levels. We expect Brent to rise into an $80–90 range in 2022.”
