Oil Down 6th Week in Row Despite Optimism Over OPEC Move

© Reuters.

By Barani Krishnan

AiVIF.com - US oil prices fell back on Friday, posting a sixth straight weekly loss, despite OPEC signaling that it was ready to pull back on production at any time if fears over the Omicron continued to hurt demand for energy.

After closing lower for five days in six, crude prices rose on Thursday and remained higher for most of Friday. But at settlement, WTI, or the West Texas Intermediate benchmark for U.S. crude, fell while Brent, the London-traded global gauge for oil, managed to eke out a gain.

Analysts read the initial bounce back as a sign of the market’s confidence in OPEC+’s decision to leave its output unchanged for now, with a caveat for change should demand collapse going into the first quarter 2022.

“Whatever initial comfort the market took with the OPEC decision seems to have evaporated and now there are fears again that this thing is going to come back and bite us in the rear,” said John Kilduff, founding partner of Again Capital, an energy hedge fund in New York.

WTI settled down 24 cents, or 0.4%, at $66.26 per barrel. For the week, the U.S. crude benchmark was down 2.8%. WTI was also off 20% for the past six weeks combined, after hitting a seven-year high of $85.41 during the week ended Oct. 15.

London-traded Brent crude, the global benchmark for oil, settled up 21 cents, or 0.3%, at $69.88. It was down 4% for the week though, and off 18% for the past six weeks combined, after hitting a 2014 high of $86.70 during the week to mid-October.

The Omicron saga appears to have turned the 2021 oil rally on its head, bringing to a halt the surge in crude prices many thought were headed to $100 a barrel, or minimum of $90, by the year end. Notwithstanding the price reversal of the past six weeks, WTI remains up 36% for the year while Brent shows a 35% gain.

Since health authorities announced the first U.S. case of the Omicron in California on Wednesday, there have been at least eight more infections reported, five of them in New York City — an early epicenter of Covid-19 in 2020.

New York City Health Commissioner Dave Chokshi said the cases in the city indicated a community spread of the Omicron, independent of infections that had directly occurred from travel to South Africa, where the strain was first detected.

“This is not just people who are traveling to southern Africa or to other parts of the world where Omicron has already been identified,” Chokshi said.