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Oil prices are predicted to remain on the rise due to thirsty US demand

OIL PRICES hit two-month highs yesterday on tight supply and easing concerns about the potential hit to demand from the Omicron coronavirus variant.

US Federal Reserve chairperson Jerome Powell said yesterday that the economy of the US, the world’s biggest oil consumer, should weather the current Covid-19 surge with only “short-lived” impact and is ready for the start of tighter monetary policy.

Brent crude futures were up 47 US cents (R7.30), or 0.6 percent, at $84.19 (R1 307.72) a barrel by 2.30pm. US West Texas Intermediate crude futures were up 66 US cents, or 0.8 percent at $81.88.

Equities, which often move in tandem with oil prices, also ticked up, while a weaker dollar also lent support.

A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies.

The Brent contract is showing growing backwardation, with front-month delivery around $4.20 more expensive than delivery in six months, indicating tight near-term supply.

Opec+ oil producers continue to hold back more than 3 million barrels per day (bpd) in output.

REUTERS

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