Oil price up over tight supply concerns, steady global demand

Oil price up over tight supply concerns, steady global demand

/ Oil & Gas / Monday, 17 January 2022 11:55

Oil prices showed an upward trend as Brent futures touched their highest in more than three years over the likelihood of supplies remaining tight as a result of restrained output by major producers as well as global demand being unaffected by Omicron variant spread.

Brent crude futures gained 40 cents, or 0.5%, to $86.46 a barrel. Earlier in the session, the contract touched its highest since Oct. 3, 2018 at $86.71.

US West Texas Intermediate crude was up 58 cents, or 0.7%, at $84.40 a barrel, after hitting $84.78, the highest since Nov. 10, 2021.

The gains followed a rally last week when Brent rose more than 5% and WTI climbed over 6%.

The Organization of the Petroleum Exporting Countries, Russia and their allies, together known as OPEC+, are gradually relaxing output cuts implemented when demand collapsed in 2020. Meanwhile, smaller producers cannot raise supply and others have been wary of pumping too much oil in case of renewed COVID-19 setbacks.

Additionally, US officials have raised concerns that Russia was preparing to attack Ukraine if diplomacy failed. The US government has held talks with several international energy companies on contingency plans for supplying natural gas to Europe if conflict between Russia and Ukraine disrupts Russian supplies, two US officials and two industry sources have revealed.

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