Oil has stabilized as supply disruptions offset Reuters’ fears of Omicron

Author: Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices remained largely stable on Monday as supply disruptions in Kazakhstan and Libya offset concerns over the global rise in Omicron infections.

It fell 13 cents, or 0.2%, to $ 81.62 a barrel at 1136 GMT, and US West Texas Intermediate (WTI) crude fell 17 cents, or 0.2%, to $ 78.73 a barrel.

Both contracts went up by about 50 cents at the start of the session.

Oil prices rose 5% last week after protests in Kazakhstan disrupted railways and tapped production in Tengiz’s main oil field, while Libya’s pipeline maintenance fell to 729,000 barrels a day from 1.3 million bpd last year.

Tengizchevroil (TCO) Kazakhstan’s largest oil company is gradually increasing production to reach normal rates on the Tengiz field, after protests have curtailed production in recent days, according to operators. Chevron (NYSE 🙂 he said on Sunday.

“Therefore, supply concerns should be lowered by the wind borrowing from oil prices, which suggests that prices will fall this week,” said Carsten Fritsch, an analyst at Commerzbank (DE :).

The fall in Azeri crude oil exports from the Turkish port of Ceyhan helped boost prices. Exports in February were set at 14.72 million barrels, down from 17.27 million in January, according to a calendar seen by Reuters.

Oil is also receiving support from rising global demand and lower-than-expected supply increases from the Organization of the Petroleum Exporting Countries, Russia and its allies, or OPEC +.

OPEC production rose by 70,000 bpd in December compared to the previous month, compared to the 253,000 bpd increase allowed under the OPEC + supply deal, which reduced production in 2020 when demand fell on the COVID-19 blockade.

Strong demand and a sharp drop in oil inventories have fueled Brent’s deep market structure and backwardness.

The retrograde market structure means that the current value is higher than it will be in the coming months and encourages traders to pull oil out of storage and sell it immediately.

Chart: Oil price structure indicates firm demand – https://graphics.reuters.com/GLOBAL-OIL/zjpqknyxrpx/chart_eikon.jpg

The rise in COVID-19 infections, however, put pressure on oil prices. Although early research has shown that Omicron has a lower risk of serious illness or hospitalization, compared to the predominant Delta variant, health networks in Spain, Great Britain, Italy and elsewhere have found themselves in increasingly serious situations.