Oil Ekes Out Minuscule Gains As Traders Seek Haven From Inflation

Meanwhile, OPEC predicts global fuel use beyond its forecasts: File Image/Pixabay

Oil prices remained static on Thursday, with West Texas Intermediate closing up a mere 0.3 percent after a volatile session capped by traders reportedly using commodities as a hedge against inflation, which in the U.S. surged to a four-decade high.

Investors also closely watched talks aimed at renewing a nuclear energy agreement with Iran, and Jen Psaki, press secretary to the White House, told media that a deal addressing all concerns is in sight.

Brent settled down 14 cents at $91.41 per barrel, while WTI settled up 22 cents to $89.88 per barrel.

Scott Shelton, energy specialist at United ICAP, said, "Prices are confused between what appears to be strong inventory statistics and signs that the Fed is going to raise rates quicker than expected in 2022."

Helge Andre Martinsen, senior oil market analyst at DNB Bank, added, "In the short term, the oil price direction will be a battle between a very tight physical market and potential return of Iranian barrels amid strong momentum in the nuclear negotiations."

Meanwhile, the Organization of Petroleum Exporting Exporting Countries in its latest monthly report acknowledged that Covid is among a host of market challenges but global fuel use could grow by more than the 4.2 million barrels per day (bpd) the cartel is currently forecasting for 2022.

The report stated, "Upside potential to the forecast prevails, based on an ongoing observed strong economic recovery; moreover, mobility is expected to gain further momentum, particularly with regard to the travel and tourism sector."

Accordingly, Willie Chiang, CEO of Plains All American Pipeline, pointed out that crude production from the Permian Basin of West Texas has topped estimates and may grow by an annual rate of 600,000 bpd over the next several years.

He said, "North American energy supply will continue to play a key role in meeting global demand growth, and the Permian is positioned to drive a vast majority of U.S. production growth."

Demand resulting in high oil prices has also proven to be good for Saudi Arabia: according to preliminary estimates released by the General Authority for Statistics on Thursday, its oil economy grew 10.8 percent in the fourth quarter of 2021, and growth for the full year was 3.3 percent, slightly better than predictions of 2.9 percent growth.

Also, consumer spending in December was 1.8 percent higher than the same month two years ago, before the pandemic.