(Bloomberg) — Oil held gains after a six-day advance as a bigger-than-expected decline in U.S. crude inventories added to evidence that energy demand is proving resilient in the face of the omicron virus wave.
West Texas Intermediate traded near $77 a barrel after a 12% jump over six sessions, the best run of gains in 10 months. Global benchmark Brent, which topped $80 Wednesday to hit the highest since late November, steadied.
U.S. crude stockpiles shrunk for a fifth consecutive week even as nationwide production increased, according to the Energy Information Administration. The 3.6-million-barrel decline compared with the median analyst estimate for a drop of 2.7 million barrels. In the U.S., omicron has so far not dented mobility, while transport data from across Asia show rising activity in December.
Omicron fears are continuing to fade, in North America at least, Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte Ltd., said in a note. “The upbeat mood was helped along by better-than-expected U.S. retail sales and larger-than-expected drops in U.S crude oil and gasoline inventories.”
Crude is on course for the biggest annual advance in more than a decade, with gains underpinned by the rebound in global consumption from the depths of the pandemic. Although spreading at a record pace, omicron has so far proved to be milder than earlier virus variants, enabling activity to continue. Goldman Sachs Group Inc. has forecast further gains in oil prices next year.
China cut the amount of crude import quota awarded to private refiners and favored complex processors as it seeks to reform the sector. Beijing granted 109 million tons , 11% less than last year, in the first batch for 2022, according to officials from companies that received notification of the allowances.
The Organization of Petroleum Exporting Countries and its allies including Russia gather next week to assess the state of the market and review supply policy into 2022. This year, the group has been restoring shuttered capacity at a gradual pace, arguing that a cautious approach is merited.
Brent’s prompt timespread — the difference between its two nearest contracts — has been volatile recently as traders assess the demand outlook. The gap was 2 cents a barrel in backwardation on Thursday, compared with 38 cents at the start of the week. Backwardation is a bullish pattern, marked by near-term prices trading above longer-dated ones.
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