MOSCOW (MRC) -- Oil prices edged higher towards USD75 a barrel on Tuesday after the International Energy Agency (IEA) said that the new Omicron coronavirus variant was set to dent the global demand recovery, reported Reuters.
Brent crude oil futures rose 27 cents, or 0.36%, to USD74.66 a barrel by 1231 GMT, while US West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.32%, to USD71.52.
"The surge in new COVID-19 cases is expected to temporarily slow, but not upend, the recovery in oil demand that is underway," the Paris-based IEA said in its monthly oil report. read more IEA/S
Governments around the world, including most recently Britain and Norway, have tightened restrictions to stop the spread of the Omicron variant.
The IEA lowered its forecast for oil demand this year and the next by 100,000 barrels per day (bpd) each, mostly due to the expected blow to jet fuel use from new travel curbs.
The Organization of the Petroleum Exporting Countries on Monday raised its world oil demand forecast for the first quarter of 2022 and stuck to its timeline for a return to pre-pandemic levels of oil use, saying the Omicron coronavirus variant would have a mild and brief impact.
At the same time, the Asian Development Bank on Tuesday trimmed its growth forecasts for developing Asia for this year and next to reflect risks and uncertainty brought on by the variant, which could also hamper oil demand.
On the supply side, OPEC and other major producers including Russia, a group known as OPEC+, plan to gradually increase supply every month by 400,000 barrels per day (bpd) after sharply cutting back output last year.
Output in the largest US shale basin is expected to surge to a record in January, according to a monthly forecast from the US Energy Information Administration on Monday.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
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