Oil up over supply outages, better demand outlook

ANKARA

Oil prices increased on Wednesday as uncertainties about the omicron variant's effects on demand outlook in 2022 eased, while supply outages also backed the upward movements of the prices.

International benchmark Brent crude was trading at $78.88 per barrel at 0627 GMT, up 0.26% from the previous session's close of $78.67.

The American benchmark West Texas Intermediate (WTI) was at $76.10 per barrel at the same time, a 0.15% gain from the previous session's close of $75.98 per barrel.

Both contracts reached their highest levels in almost a month of trading as omicron's impact on oil prices began to ease after milder symptoms of the variant increased the euphoria about a better demand outlook for next year.

Cementing positive demand sentiments, the UK said it will not impose new COVID-19 restrictions before 2022.

Meanwhile, US President Joe Biden has promised to address a COVID-19 test shortage, as the omicron variant threatens to overload hospitals and disrupt travel plans.

Thousands of flights have been canceled in the US since last week due to omicron-induced staff shortages.

Supply disruptions in Ecuador, Libya, and Nigeria also provided support on prices.

Ecuador's state-owned pipeline SOTE has ruptured due to erosion in the Amazon region.

In Libya, the National Oil Company (NOC) reported that more than 300,000 barrels per day (bpd) of crude production is shut down at fields in the country's west by the Petroleum Facilities Guard (PFG), a paramilitary unit tasked with protecting NOC's assets and facilities.

In Nigeria, Royal Dutch Shell declared "force majeure" on Nigerian Forcados crude oil deliveries after a faulty barge obstructing tanker traffic last week.

Investors are also waiting for the upcoming meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, on Jan. 4. The group will decide whether to increase output by 400,000 bpd in February.

The OPEC+ producers in their previous meeting agreed to stick to the scheduled output scheme, ignoring requests from some countries, including the US, to raise the production.

Fall in US inventories help upward price movements

Late Tuesday, the American Petroleum Institute (API) announced that it expects US gasoline inventories to fall by 3.1 million barrels, which is less than the market's expectation of a 3.2 million barrel increase.

The forecast of such a large inventory draw signals a recovery in crude demand in the US, easing investor concerns over dwindling demand, which, in turn, supports higher prices.