Still, stymied output in some countries may be troublesome in the weeks ahead: File Image/Pixabay
Oil prices on Friday incurred minor losses but not enough to prevent a third weekly advance, this time of 5 percent, thanks to a global market tightening on outages and demand remaining robust.
Ed Moya, senior market analyst for the Americas at Oanda, explained Friday's trading behaviour by remarking, "The oil market remains very tight and seems like it will go higher, but energy traders are concerned curbs across Europe and Asia could threaten the short-term demand outlook."
West Texas Intermediate dropped 56 cents to settle at $78.90 per barrel, while Brent fell 24 cents to settle at $81.75 per barrel.
Edward Moya, senior market analyst, OANDA
The oil market remains very tight and seems like it will go higher
The outages included oil flow disruptions in North America due to severe weather in Canada and northern U.S., a slowdown in Libya due to militia unrest, Nigeria encountering disruptions at loading facilities, and Russia failing to boost volumes last month in accordance with an Organization of the Petroleum Exporting Countries (OPEC) agreement.
Despite analytical worry that lockdowns in some parts of the world due to omicron could harm demand, that has yet to transpire and is certainly not the case in the U.S., where on Friday Baker Hughes disclosed that U.S. energy firms continued to add oil and natural gas rigs this week, building on a 2021 rig count increase after two years of declines.
The count, which is an early indicator of future output, rose two to 588 in the week to January 7, its highest since April 2020, and the total rig count was up 228 rigs, or 63 percent, over this time last year.
Also, a growing number of energy firms said they will raise spending for a second year in a row – by an estimated 13 percent - this year after cutting drilling and completion expenditures in 2019 and 2020.
Meanwhile in China, gasoline inventories dropped 2 percent week-over-week through January 6 to 14.7 million tons, or 42 percent of capacity, according to OilChem; and in Canada oil sands producers exported a record amount of crude to overseas markets, thanks to a new link to the U.S. Gulf Coast.
Carsten Fritsch, analyst at Commerzbank, said, "The concerns about a massive slump in oil demand have faded now that it has become clear that omicron leads to milder forms of the disease than previous variants of the virus, meaning that massive mobility restrictions are not likely."