Traders expect tighter production from major producers on Monday morning in London, with oil prices rising. However, omicron COVID-19 variants didn’t affect global fuel demand.
The Brent oil contract edged up by at least 150 basis points to trade at $86.19 a barrel, while the WTI contract rose 0.34% to $83.5 a barrel.
Futures for Brent crude are at their highest levels in over three years, Despite the gains from the previous week, both major oil benchmarks surged.
Black liquid may reach multi-year highs with easing concerns that omicron will dent demand, along with tighter production.
The bullish sentiment continues because the Organization of Petroleum Exporting Countries and allies (OPEC+) cannot meet the strong demand globally.
Prices could reach 2014 highs if investment funds increase allocation weight for crude, OPEC+ decided to increase supply on January 4, 2022, however, many investors are hesitant about the ability of smaller producers to meet the agreed output while some producers are hesitant about pumping too much oil over fears of COVID-19 outbreaks.
Oil also benefited from the continued tensions between the U.S. and OPEC+ member Russia over Ukraine. Any armed conflict could affect Russian oil production due to the presence of 100,000 Russian troops on the Ukraine border.
Reports show that the U.S. has held talks with several international energy companies about contingency plans for supplying gas to Europe in case of a conflict,
Additionally, supply is a problem in Asia Pacific. A coordinated release plan led by the United States calls for China to release its oil reserves around the Lunar New Year holiday