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Title: Oil prices shrug off Omicron slump; soar to 2-month highs

Jan 12, 2022 07:36AM ET

By: AnalysisWatch

Oil prices hit a two-month high on Wednesday on tight supplies and easing concerns about potential demand damage from the Omicron coronavirus.

Federal Reserve Chairman Jerome Powell said on Tuesday the US economy, the world's biggest oil consumer, would only weather the current COVID-19 surge "in the short term" and was prepared to tighten monetary policy.

At 1211 GMT, Brent crude futures were up 42 cents, or 0.5 percent, to $84.14 per barrel.

West Texas Intermediate (WTI) crude futures in the United States rose 60 cents, or 0.7 percent, to $81.82 per barrel.Both contracts have risen for the sixth time in the last eight days.

Stocks, which often move in lockstep with oil prices, also gained, while a weaker dollar, which makes dollar-denominated oil contracts cheaper for holders of other currencies, also provided support.

The Brent contract is showing expanding backwardation, with first-month conveyance about $4.20 more costly than half year conveyance, demonstrating tight stock as of now.

Oil makers in OPEC+ nations keep on keeping down yield by multiple million barrels each day while sanctions on Iran control its products.

And although OPEC+ producers are raising their production targets every month, several countries have been unable to meet their quotas due to technical difficulties.

Meanwhile, jet fuel refining margins in Europe have returned to pre-pandemic levels as supplies tighten in the region and global aviation activity picks up.

US crude oil inventories fell by 1.1 million barrels in the week ended January 7, market sources said, citing figures from industry group the American Petroleum Institute (API).

The government's figures are expected on Wednesday.

On Tuesday, the U.S. Energy Information Administration raised its oil demand forecasts, expecting U.S. demand to increase by 840,000 barrels per day through 2022, up from a previous forecast of 700,000 barrels per day.

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