Oil prices poised for biggest annual gains since 2009

Brent and WTI post more than 50% improvement in 2021, with both contracts peaking above $80 a barrel in October

Benchmark oil contracts are on track to record their best performances since 2009. Reuters

Oil prices slid on Friday but were poised to post their biggest annual gains in 12 years, spurred by the global economic recovery from the Covid-19 slump and producer restraint, even as infections around the world surged to record highs.

Brent crude futures fell 31 cents, or 0.4 per cent, to $79.22 a barrel at 04.27 GMT, while US West Texas Intermediate crude futures dropped 37 cents, or 0.5 per cent, to $76.62 a barrel.

Brent is on track to end the year up 53 per cent, while WTI is heading for a 57 per cent gain, the strongest performance for the two benchmark contracts since 2009, when prices soared more than 70 per cent. Both contracts touched their 2021 peak in October with Brent at $86.70 a barrel, the highest since 2018, and WTI at $85.41 a barrel, the loftiest since 2014.

Global oil prices are expected to rise further next year as demand for jet fuel catches up.

"We've had Delta and Omicron and all manner of lockdowns and travel restrictions, but demand for oil has remained relatively firm. You can attribute that to the effects of stimulus supporting demand and restrictions on supply," said Craig James, chief economist at Australian brokerage CommSec.

However, after rising for several straight days, oil prices stalled on Friday as Covid-19 cases soared to new pandemic highs around the globe, from Australia to the US, stoked by the highly transmissible Omicron coronavirus variant.

We've had Delta and Omicron and all manner of lockdowns and travel restrictions, but demand for oil has remained relatively firm. You can attribute that to the effects of stimulus supporting demand and restrictions on supply

Craig James,
chief economist at CommSec

US health experts warned Americans to prepare for severe disruptions in the weeks ahead, with infection rates likely to worsen amid increased holiday travel, New Year celebrations and school re-openings after the winter break.

With oil hovering near $80, the Organisation of the Petroleum Exporting Countries, Russia and allies, together called Opec+, when they meet on January 4 will probably stick to their plan to add 400,000 barrels per day of supply in February, four sources said, as they continue to wind back sharp production cuts implemented in 2020.