Oil prices hit their highest level since late November, boosted by three positive trends

International oil prices rebounded for the second week in a row, updating their highest level since late November, with crude oil rising above the $80 mark, buoyed by the global economy's recovery from the pandemic-induced recession, as well as subdued production and a worsening geopolitical situation, despite record highs in global coronavirus infections
.

NYMEX crude futures rose 2.
29% to $75.
45 a barrel; ICE Brent crude futures rose 3.
11% to $77.
94 a barrel
.
Both hit new highs since Nov.
26, at $77.
44/b and $80.
03/b
, respectively.
The annual lines of the two cities rose by 55.
82% and 50.
70% respectively, recording the best annual performance
since 2009 and 2016 respectively.

John Kilduff, Partner at Again Capital Management in New York, said: "This year has been a year of recovery for global petroleum products, the oil market continues to be sensitive to pandemic developments, and we are not out of the woods, but we are close to pre-pandemic demand levels
.
"

The fight against the epidemic does not affect demand

U.
S.
crude inventories fell by 3.
576 million barrels in the week ended Dec.
24, beating market expectations of 2.
7 million barrels
, according to data released by the U.
S.
Energy Information Administration (EIA) on Wednesday (Dec.
29).
Meanwhile, gasoline and distillate inventories also fell by 1.
726 million barrels and 1.
459 million barrels, respectively, indicating that demand remains strong
.

Further supporting the sentiment, governments around the world are trying to limit the impact of
the pandemic on economic growth by easing testing rules and shortening the quarantine time for Covid-positive people or contacts.
Spain said on Wednesday that the quarantine period would be reduced from 10 days to 7 days
.
Italy, on the other hand, said it plans to relax quarantine rules
for close contacts of patients.
Earlier this week, U.
S.
health authorities issued new guidelines shortening the quarantine period for people with confirmed infections from 10 days to 5 days, provided they are asymptomatic
.

Jim Ritterbusch, president of Ritterbusch and Associates LLC, said: "The stock market reached or near record highs at the end of the year, which could easily spill over into the oil market and push crude oil prices
higher.
”

Craig James, chief economist at Australian brokerage CommSec, said: "We've experienced Delta and Omicron, as well as various lockdowns and travel restrictions, but demand for oil remains relatively firm, which you can attribute to the result of pro-demand stimulus and supply constraints
.
”

Damien Courvalin, head of energy research at Goldman Sachs, said: "If this is a new wave of the pandemic as we have seen before, it will hit economic growth negatively in the first quarter of 2022
.
But if a recovery follows, global oil demand, which briefly touched pre-pandemic levels in early November, will hit record highs for much of 2022
.
”

Abhishek Chauhan, head of commodities at Swastika Investmart, said: "Omicron concerns have eased globally, sparking some optimism about demand.
.
.
Oil prices are expected to be skewed to the upside
.
”

Richard Gorry, managing director of JBC Energy Asia, said Asian gasoline demand is expected to grow by 350,000 b/d
in 2022.
"Most of this growth will come from India and China, but we will even see a 30,000 b/d
increase in Japanese demand as Covid restrictions are gradually lifted.
"

OPEC+ may continue to maintain the current government

Oil investors are focused on the next OPEC and its allies (OPEC+) meeting
on Jan.
4.
With oil prices hovering around $80, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are likely to stick to their current plan to increase production by 400,000 b/d a month when they meet on Jan.
4
, the sources said.

Ajay Kedia, head of Kedia Commodities, said: "Volume is sparse due to the holidays; The market has priced in Omicron's concerns
.
Therefore, the focus is on the OPEC+ meeting
on January 4.
”

Gasoline prices strengthened sharply earlier this year after a surge in crude oil prices in 2021, with US President Joe Biden calling on the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to accelerate overall production increases, but OPEC+ ignored them, adding to tensions between producers and consumers
.

Moreover, some OPEC members face difficulties in increasing production due to insufficient investment and poor maintenance, as data show that OPEC still exceeded its production cut agreement
in November.
At the same time, the U.
S.
shale oil industry has been pressured by investors to limit spending and has been unable to respond to
rising prices as it has in the past.

Giovanni Staunovo, an oil analyst at UBS, said: "Production disruptions in Ecuador, Libya and Nigeria, as well as another sharp decline in US crude inventories, also provided support
.
”

Saudi Arabia's King Salman said on Wednesday (Dec.
29) that the OPEC+ production deal was "critical" to oil market stability and stressed the need for producers to comply with it
.
In his annual speech through state media, Salman said that stabilizing and balancing the market is a pillar
of Saudi energy policy.
Saudi Arabia's efforts to maintain spare capacity have proven to be important
to ensure the security of energy supply.

Russian Deputy Prime Minister Alexander Novak, who oversees Moscow's relations with OPEC, an alliance of oil producers, has said oil production is expected to reach pre-pandemic levels by May, at about 11.
33 million b/d in April 2020
.

Analysts and company sources said on Tuesday that Russia is unlikely to meet its goal of returning oil production to pre-pandemic levels next May due to a lack of spare capacity, but may do
so later next year.

Novak also said that the possible release of strategic oil reserves by the United States and other major consumers will have a limited short-term impact
on the oil market.
Global oil demand is expected to increase by about 4 million b/d in 2022 and up to 5 million b/d
this year.
Oil prices in 2022 should be between
$65-$80 per barrel.