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Title: Oil rises above $78 on optimism about 2022 outlook

Jan 03, 2022 09:50AM ET

By: AnalysisWatch

Tight supply and hopes of a further recovery in demand in 2022 pushed oil prices above $78 a barrel on Monday, although OPEC+ is expected to agree on another output increase and concerns about the impact of rising coronavirus cases on demand persist.

OPEC and its allies (OPEC+) are expected to agree to a production increase on Tuesday. The coronavirus variant Omicron has led to a record number of cases and affected New Year celebrations around the world, causing more than 4, 000 flights to be canceled on Sunday.

Brent crude was up 39 cents, or 0.5 percent, to $78.17 per barrel at 1444 GMT, after reaching a high of $79.05 earlier.US West Texas Intermediate (WTI) crude fell 25 cents, or 0.3%, to $74.96.

At the same time, "infection rates are rising around the world, restrictions are being introduced in several countries, and the aviation sector, among others, is suffering, yet investor optimism is palpable," said Tamas Varga of oil broker PVM.

In summary, 2021 has shown that the fight against the coronavirus can be won, even if the road to victory is paved with unexpected twists and turns.

Many US schools that would normally send their students back to classrooms on Monday are postponing the start of classes, testing students and teachers, and preparing to return to distance learning as a last resort as record numbers of COVID-19 cases of the Omicron variant sweep the country.

Oil prices were somewhat supported by a disruption in Libya. Oil production will be cut by 200 000 barrels per day for a week due to pipeline maintenance.

Last year, Brent rose 50%, spurred by the global recovery from the COVID-19 pandemic and OPEC+ supply cuts, even as infections hit record highs globally.

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