Oil Prices have been supported by US oil demand and inventories in recent months, and have continued to do so, despite stock prices being below the five-year average for this time of year. While Oil Prices have swung in recent weeks from as high as $85 in late October to below $70 in late November amid fears of Omicron stifling demand and a looming oversupply, lower-than-usual American stockpiles have remained a consistent bullish theme for oil, particularly the US benchmark, WTI Crude.
Tight American stockpiles, along with strong U.S. gasoline consumption and record-high total petroleum demand, have kept Oil Prices stable, or at least from falling too far, despite market fears of a slowdown in global oil demand recovery and a return to surplus in the coming weeks.
The International Energy Agency (IEA) noted earlier this week that while the increase in COVID cases is expected to temporarily hinder global oil demand recovery, the impact of the Omicron variety would likely be more subdued than prior waves and will not upend the present demand recovery.
Due to the massive vaccination programmes, new containment measures put in place to stop the virus’s transmission are likely to have a more muted impact on the economy than earlier Covid waves. As a result, we anticipate continued healthy increase in demand for road transport fuels and petrochemical feedstocks. The Omicron scare has had the most impact on jet fuel demand, as international travel has been curtailed once again, with many nations imposing stricter entrance procedures, including for fully vaccinated tourists.