WTI dips to weekly lows in mid-$75.00s amid choppy year-end trade, remains on course for massive annual gains By Frank_Macro Oil WTI OPEC
that has seen WTI dip just under $1.0 on the session shouldn’t distract from the fact that oil prices are set to post their best annual return since 2009. WTI is set to post gains of more than 55% having surged from lows last January of underneath $50.00 per barrel. Crude oil has surged this year as the global economy has recovered from the 2020 pandemic-induced recession and become more resilient with time to successive waves of the virus, largely thanks to rising vaccination rates.
After surging as high as the $85.00s in October , oil prices saw a sharp correction lower in November and into December on fears of economic disruption and crude oil demand destruction after the emergence of the new, highly transmissible Omicron variant of Covid-19.
But Omicron risks remain, with countries across the world reporting record daily infections and this is capping oil’s gains. The fact that New Year’s celebrations have been canceled across many parts of the world is indicative of some of the near-term risks faced by the global economy and could perhaps be behind some of Friday’s year-end profit-taking. Separately, some investors fear supply-side dynamics could weigh on oil prices in 2022 as OPEC+ and US output climbs.
These fears were on show in a poll released by Reuters on Friday. The median forecast of survey participants was for WTI to average slightly more than $71.00 over the course of 2022, a downwards revision of expectations for next year’s oil prices from the November poll. In the prior poll, the median investor forecast had been for WTI to average just over $73.00 next year.
market balance expanding rather than shrinking in 2022 and thus expect prices to trend lower from today's levels.”
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