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Title: Oil heads for best week since mid-Dec, Kazakhstan unrest stokes supply worries

Jan 07, 2022 02:45AM ET

By: AnalysisWatch

Oil costs progressed on Friday, heading for their greatest week-by-week gains since mid-December, fuelled by supply worries in the midst of raising distress in Kazakhstan and blackouts in Libya.

Brent unrefined fates climbed 52 pennies, or 0.63%, to $82.51 a barrel at 0721 GMT in the wake of rising 1.5% in the past meeting. U.S. West Texas Intermediate (WTI) rough prospects rose 57 pennies, or 0.72%, to $80.03 a barrel, broadening their 2.1% increase from the past meeting.

Brent and WTI were on track to gain more than 6% in the first week of the year, with prices at their highest since late November, as concerns about supply outweighed fears that the rapid spread of the Omicron coronavirus variant would hurt demand.

After days of unrest in Kazakhstan, during which the government imposed a state of emergency, Russia deployed paratroopers on Thursday to quell the uprising.

The protests began in the oil-rich western regions of Kazakhstan after government price caps on butane and propane were lifted on New Year's Day.

Meanwhile, output from the Organization of Petroleum Exporting Countries, Russia and its allies, collectively known as OPEC+, is not keeping pace with rising demand.

OPEC production rose by 70,000 barrels per day in December from the previous month, while the OPEC+ agreement calls for an increase of 253,000 barrels per day. The OPEC+ agreement restored production that had been cut in 2020 when demand slumped due to the COVID-19 shutdowns.

Libya's oil production has fallen to 729,000 barrels per day from a peak of 1.3 million barrels per day last year, partly due to pipeline maintenance.

While the Omicron variant is spreading rapidly, demand-side concerns are easing as there is growing evidence that it is less severe than previous variants and as governments generally adopt less rigid containment measures, Fitch Solutions analysts said in a note.

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