geopolitics

Prices climbed to a seven-week high as supply constraints from OPEC+ to North America offset concerns about the impact of a Covid-19 outbreak in China.

Prices jumped more than 1% on the first trading day of the new year ahead of an OPEC+ meeting on Tuesday to discuss production policy.

The New York futures exchange was closed on Friday, while London futures slipped towards $76 a barrel in very light holiday trading. 

Futures posted a weekly decline after a few volatile days that saw traders grow more concerned about the demand impact from the omicron variant and tighter monetary policy.

Futures saw their biggest weekly gain in more than three months as the worst fears over the new virus strain have receded.

Crude prices ended little changed on Friday after erasing earlier gains on growing worries that rising coronavirus cases and a new variant could reduce global oil demand.

The discovery of a new coronavirus variant named Omicron triggered global alarm on Friday as countries rushed to suspend travel from southern Africa, and the equity and commodity markets on both sides of the Atlantic suffered their most significant drop in more than a year.

Crude futures moved sharply lower on Friday as the markets weighed the impacts of new pandemic lockdowns in Europe and a stronger US dollar. WTI settled down $2.91 at $76.10, and Brent moved $2.35 lower to settle at $78.89.

Prices notched the longest stretch of weekly losses since March, with President Biden keeping investors guessing about whether he’ll act to tame higher energy prices that are driving a surge in inflation.

The OPEC+ group of major producers agreed on Thursday to stick to their plan to raise oil output by 400,000 b/d from December, ignoring calls from President Biden for extra output to cool rising prices.

Futures rose above $84 a barrel on Friday, within sight of a multi-year high hit last week. Expectations that OPEC and its allies will keep supply tight countered a weekly rise in US inventories and the prospect of more Iranian exports.

Futures rallied last week on concerns that rising consumption is racing ahead of supply.   Oil prices rose early on Thursday, with Brent Crude rallying to $86.10—the highest price since October 2018.