Oil prices are rising as US fuel demand has risen despite rising viruses

Author: Jessica Jaganathan

SINGAPORE (Reuters) – Oil prices rose on Thursday as US consumer demand rose to record highs in the world’s major oil consumers, although the Omicron variant of coronavirus threatens to reduce oil consumption.

The US Federal Reserve signaled rising prices even before the U.S. economy stalled inflation.

futures rose 72 cents or 1% to $ 74.60 a barrel for 0752 GMT, while US futures for West Texas Intermediate (WTI) rose 79 cents or 1.1% to $ 71.66.

“Despite the current rise in the virus, the weekly EIA Oil Inventory report showed record oil product demand, declining gross exports and a higher-than-expected level of crude nation stocks,” said Edward Moya, senior OANDA analyst.

“This current wave of Omicron may lead to limited restrictive measures in the United States, but the blockages at the peak of the pandemic will not be re-examined.”

inventories sank 4.6 million barrels in the week to December 10, according to data from the U.S. Energy Information Administration. That was more than double the expectation in a Reuters poll, a drop of 2.1 million barrels.

Refinery supply, a substitute for demand, rose to 23.2 million barrels per day (bpd) last week due to profits from gasoline, diesel and other refined products.

Analysts say the rise reflects the rise in the number of people traveling on holiday and the hopes of releasing the necks of the supply chain with more trucks on the road that sends goods.

Meanwhile, the Federal Reserve said it would end pandemic-era bond purchases in March and begin raising interest rates as unemployment remains low and inflation rises.

“The FOMC policy decision was the right amount of hawkishness, allowing risk appetite to continue to be healthy and conducive to economic growth, which is also positive for oil demand,” Moya added.

Concerns about the coronavirus reduced price gains.

The UK and South Africa reported a record number of COVID-19 cases per day, with Omicron rapidly expanding, and many companies around the world were asking employees to work from home, which could limit oil demand.