The growth was spurred by the post-Covid recovery of the global economy
Oil posted its biggest annual rise since 2009 as the rapid Covid-19 vaccine rollout across the world stimulated the reopening of economies, boosting consumption, while oil output remains limited after the pandemic slump.
US benchmark West Texas Intermediate (WTI) advanced 55% for the biggest year-to-date gain in over a decade, while global benchmark Brent crude saw an increase of 50%, the largest gain in half a decade.
Brent crude futures were down $1.75, or 2.2%, at $77.78 per barrel on the final day of 2021. WTI crude futures finished the year down $1.78, or 2.31%, to $75.21 per barrel.
Both contracts reached their 2021 peak in October, with Brent at $86.70 per barrel, the highest since 2018, and WTI at $85.41 per barrel, the highest since 2014.
“We’ve had Delta and Omicron and all manner of lockdowns and travel restrictions, but demand for oil has remained relatively firm,” Australian brokerage firm CommSec’s chief economist, Craig James, said, as quoted by Reuters.
“You can attribute that to the effects of stimulus supporting demand and restrictions on supply.”
Global oil prices are projected to further increase, as jet fuel demand catches up with investors trying to gauge the outlook for energy consumption in 2022. At the same time, the latest Covid-19 variant is rapidly spreading, while OPEC is set to gather with allied producers on January 4 to discuss output policy.
“Crude oil had an excellent 2021, supported by ongoing decline of oil inventories benefiting from the demand recovery and oil supply lagging demand growth,” Giovanni Staunovo, commodity analyst at UBS Group AG, told Bloomberg.
Staunovo added that heading into 2022, “the oil market remains dependent on oil from OPEC+.” The group is expected to stick to the plan to add 400,000 barrels per day of supply in February during the upcoming meeting.
According to a Reuters poll of 35 economists and analysts, Brent crude will average $73.57 per barrel in 2022, about 2% lower than the $75.33 consensus in November.
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