Oil Prices in 4th Weekly Gain on Signs of Tighter Supplies, Firmer Demand

© Reuters.

By Yasin Ebrahim – Crude settled higher on Friday, notching a fourth positive week, supported by bets the Omicron-fueled drag on demand will be short-lived at a time when global supplies are expected to tighten.

On the New York Mercantile Exchange gained 2.1% to settle at $84.82 a barrel, while on London’s Intercontinental Exchange (NYSE:), added 2.0% to trade at $86.14 a barrel.

The fourth week of gains in oil prices has been supported by easing fears about the Omicron variant’s impact on demand.

The International Energy Agency said earlier this week that demand was proving stronger “than many of the market observers had thought, mainly due to the milder Omicron expectations.”

As well as positive demand, supply disruptions from key producers including Nigeria and Libya have propped up bets of tightening global supplies and underpinned a climb in oil prices.

“The forward curves of Brent and WTI are in a pronounced state of backwardation, which points to tight supply,” {{0|Commerzbank said in a note after lifting its price target for Brent in the current quarter to $80 from $70.

Oil prices were also underpinned by a weaker dollar, which despite a gain on Friday, is on course for a weekly slump. 

A weaker dollar makes oil, priced in the U.S. dollars, less expensive in other currencies, boosting demand.

The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.40% to $95.15, but is on course for weekly loss.

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