Oil prices rise on record US oil demand

The price of WTI crude rose nearly 2% on Thursday on EIA reports that implied demand for petroleum products in the United States had reached record highs.

Implied demand for petroleum products in the United States reached 23.191 million bpd for the week ending December 10. The previous record was set during the week ending August 27 this year, which reached new highs of 22.820 million bpd.

Rising demand for petroleum products inspired renewed optimism in the market as market uncertainty eased after the Federal Reserve announcement.

The price of a barrel of WTI rose to $72.04, up $1.17 (+1.65%) on the day. The price of a barrel of Brent also rose despite the measures taken to thwart the new Omicron variant, rising to $74.76, up $0.88 (+1.19%) on the day. Oil prices are now at a three-week high.

The price moves come just days after Saudi Arabia’s energy minister warned traders not to sell short on oil like they did on Thanksgiving.

To avoid such actions, the OPEC+ group left its previous meeting open in case it needed to make last-minute changes to its production strategy. Currently, the group should increase its production by 400,000 bpd from January. But excessive shorts or falling prices could prompt the group to put the brakes on these plans to increase production.

Indeed, leaving the meeting open and in a suspended state, and Saudi Arabia’s warnings to shorts that betting against oil would leave traders “flirting like hell” supported oil prices.

Rising oil prices are somewhat tempered by fears of an Omicron surge which some say is, at this stage, unstoppable.

By Julianne Geiger for Oilprice.com

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Felix J. Dixon