MOSCOW (MRC) -- Oil prices fell in late December but were set to post their biggest annual gains since at least 2016, spurred by the global economic recovery from the COVID-19 pandemic slump and producer restraint, even as infections reached record highs worldwide, reported Reuters.
Brent crude futures settled down USD1.75, or 2.2%, at USD77.78 a bbl. US West Texas Intermediate (WTI) crude futures dropped USD1.78, or 2.31%, to USD75.21 a bbl.
Brent ended the year up 50.5%, its biggest gain since 2016, while WTI posted a 55.5% gain, the strongest performance for the benchmark contract since 2009, when prices soared more than 70%.
Both contracts touched their 2021 peak in October, with Brent at $86.70 a bbl, the highest since 2018, and WTI at $85.41 a bbl, the highest since 2014.
"This year was a story of global recovery for petroleum products," said John Kilduff, a partner at Again Capital Management in New York.
"The oil market continues to be highly reactive to developments on the pandemic front - we're not out of the woods yet, but we are close to pre-pandemic demand levels."
Global oil prices are expected to rise further next year as jet fuel demand catches up.
"We've had Delta and Omicron and all manner of lockdowns and travel restrictions, but demand for oil has remained relatively firm," said Australian brokerage firm CommSec's Chief Economist Craig James.
"You can attribute that to the effects of stimulus supporting demand and restrictions on supply."
However, after rising for several straight days, oil prices stalled on December, 31, as COVID-19 cases soared to new pandemic highs across the globe, from Australia to the US, stoked by the highly transmissible Omicron coronavirus variant.
US health experts warned Americans to prepare for severe disruptions in coming weeks, with infection rates likely to worsen amid increased holiday travel, New Year celebrations and school reopenings following winter breaks.
A Reuters survey of 35 economists and analysts forecast Brent crude would average USD73.57 a bbl in 2022, about 2% lower than the USD75.33 consensus in November.
It is the first reduction in the 2022 price forecast since the August poll.
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.