Meanwhile, prices for cargoes to Asia refineries are rallying: File Image/Pixabay
With a growing number of analysts regarding omicron impact as increasingly fleeting and irrelevant, oil prices on Thursday took a minimal dip but maintained a near two-month high – however, some experts warned that low stockpiles globally will render crude susceptible to price spikes.
West Texas Intermediate fell 52 cents to settle at $82.12 per barrel, and Brent fell 20 cents to settle at $84.47 per barrel.
Also, outlook optimism was reflected in the backwardated pricing structure: the spread between WTI’s two nearest December contracts was at $6.46 per barrel, up from less than $5 at the end of last year.
Tamas Varga, analyst, PVM Oil Associates Ltd.
The oil market is unbelievably resilient, and bulls are in full control
Ed Moya, senior market analyst for the Americas at Oanda, said, “With strong growth in the U.S. and abroad, the oil market is going to remain fairly tight as demand will continue to outpace supply.”
Meanwhile, Bloomberg reported on Thursday that prices for cargoes reaching oil refineries in Asia in two or three months’ time have been rallying strongly all over the world so far this year.
Tamas Varga, analyst at PVM Oil Associates Ltd., remarked, “The oil market is unbelievably resilient, and bulls are in full control; the physical crude market is way over the forward or futures contracts [and] this implies genuine prompt tightness.”
Still, there are lingering fears over Covid based on last month’s mobility data from Apple, which showed that road traffic had thinned across Asia; but since the peak of the omicron surge as evidenced first in South Africa, then the UK and now in parts of the U.S. suggests it is about one month in duration, the numbers from January onward may be markedly different (although some observers have expressed worry over China’s lockdowns dictated by what is widely regarded as an unrealistic zero-Covid infection policy).
Ed Morse, global head of commodities research at Citigroup, said oil markets will be in a fragile balance in the first three months of the year, but will then move into a structural surplus that will continue over the next seven quarters.
He told Bloomberg television that the fragile balance is largely due to “seasonal factors” and that “supply recovery” will follow: “People are focusing a little bit too much on supply constraints.”