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Oil closes higher, with less fear for Omicron and ends week with gains

Oil futures closed higher on Friday (14), ending a week of gains for the barrel marked by less concern about the impacts of the Omicron variant of the coronavirus on demand.

At the current stage, a new release of reserves is discussed by consuming countries, especially China, which registered an increase in oil imports in December.

WTI crude for February delivery closed up 2.07% ($1.70) at $83.82 a barrel on the New York Mercantile Exchange (Nymex), while Brent for March rose 1, 88% ($1.59), at $86.06 a barrel, on the Intercontinental Exchange (ICE). In the week, the most liquid contracts accumulated gains of 6.23% and 5.27%, respectively.

In the assessment of Edward Moya, an analyst at Oanda, the oil market will remain very tight this year and likely for years to come, as most energy companies are not investing in massive new drilling projects.

The number of active oil wells and rigs in the US rose by 11 in the last week to 492, Baker Hughes reported today.

In Moya’s view, US President Joe Biden could resort to another strategic reserve (SPR) release, and while that won’t solve any problems, it could send WTI to the $80 level.

Today (14th), the Reuters published that China will release oil from its reserves around the Lunar New Year holiday, which begins Feb.

If oil is above $85 a barrel, China will release a larger share of its reserves, one of the sources said.

With the country’s trade balance released today, Commerzbank notes that China imported significantly more oil in December.

As reported, imports rose to a nine-month high of 10.87 million barrels a day last month, which put them almost 20% higher than the previous December, the German bank recalls.

For the week, Capital Economics notes that oil has risen, apparently with optimism that the impact on transport demand from the ongoing Omicron wave will be short-lived.

However, with mobility falling in the main economies and China repressing new outbreaks of the virus, “we think that demand will not meet market expectations, which would cause a drop in prices”, ponders the consultancy.

Reference: CNN Brasil

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