Crude prices settled at a two-month high on Friday as demand remained steady despite a high number of Covid-19 infections and amid tight supply due to operational disruptions in some oil-producing countries.
Brent, the international benchmark, rose more than 5 per cent over the week, while West Texas Intermediate, which tracks US crude grades, also gained about 5 per cent. Brent dropped 0.29 per cent to settle at $81.75 per barrel on Friday, while WTI fell 0.7 per cent to close at $78.90 per barrel.
“Oil prices are continuing to climb at the end of the week as unrest in Kazakhstan and lower output from Libya further hamper producers' ability to gradually return to pre-pandemic levels,” Edward Moya, senior market analyst at Oanda, said.
“And it's happening at a time when demand is expected to remain strong thanks to Omicron symptoms being mild by comparison to other variants.”
Protests broke out last week in Kazakhstan, an important oil producer and Opec+ member, over a fuel price increase. This led to large-scale violence across the country.
Dozens have died and public buildings across the country have been ransacked and torched in the worst violence the ex-Soviet republic has experienced in 30 years of independence.
Kazakhstan president Kassym-Jomart Tokayev ordered security forces to "shoot to kill" to quash protests on Friday as protests continued across the country.
Production in Libya, also an Opec member, dropped due to pipeline maintenance works that have contributed to higher crude prices.
“The current strength in energy prices can be largely attributed to the overall supply tightening narrative” Vijay Valecha, chief investment officer at Century Financial said, citing unrest in Kazakhstan as well as “extremely cold” conditions in North America that disrupted production in Canada.
“Much of western Canada has been in the middle of a deep freeze for the past two weeks. Due to extremely cold conditions, US-North Dakota’s Bakken field’s oil production has been crippled.”
Opec+, which is led by Russia and Saudi Arabia, decided to add another 400,000 barrels of oil per day to the market in February as the group expects continued demand for crude.
Last month, Opec raised its global oil demand forecast for the first quarter of 2022 but left its full-year growth projection unchanged as it expected the Omicron variant to have a mild impact on demand.
The oil-producers' group expects crude demand to average 99.13 million bpd in the first quarter of 2022, up 1.11 million bpd from its forecast in November. World oil demand growth remained unchanged at 4.2 million bpd for the full year and total global consumption stood at 100.6 million bpd.