Oil Firms, Near the Highest Level

Oil in the United States rose for the sixth straight session. Brent gained ground as a broad-based rally in global markets supported prices.

Brent crude rose 23 cents, or 0.3 percent, to $79.17 per barrel. West Texas Intermediate (WTI) crude in the United States gained 21 cents, or 0.3 percent, to $76.19 per barrel.

Both contracts are trading near their highest levels in a month, helped by the stock market’s strength. Since late November, asset classes ranging from oil to equities had recovered losses when the Omicron variant of COVID-19 sent investors fleeing for cover.

A delay in imposing more COVID curbs in the United Kingdom and France before the end of the year also piqued investors’ interest. Investors have returned to risk assets as the worst fears about the variant’s impact have subsided. Omicron’s staff shortages caused by Omicron resulted in thousands of flight cancellations in the United States over the Christmas holiday.

This month, oil prices support by three oil producers declaring force majeure on a portion of their oil production. This is due to maintenance issues and oilfield shutdowns.

Crude oil inventories in the United States expect to fall for the fifth week. In contrast, gasoline inventories wish to remain mostly unchanged from the previous week.

Omicron and Investors

Due to a lack of spare production capacity, Russia is unlikely to meet its May target of pre-pandemic oil output levels but could do so later in the year, analysts and company sources said on Tuesday.

Oil and gas condensate output expect to return to pre-pandemic levels by May, or approximately 11.33 million barrels per day (BPD), as seen in April 2020.

Investors expect an OPEC+ meeting on January 4 to decide whether to proceed with a planned 400,000 barrels per day increase in February production.

Despite Omicron, OPEC+ stuck to its plans to increase output in January at its most recent meeting. According to the Iranian Oil Ministry on Tuesday, the development of Azadegan, Iran’s largest oilfield, is expected to be completed by mid-2023, with a total production capacity of 320,000 barrels per day (BPD).