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Oil Gains as Saudis Signal Confidence in Demand With Price Hike

Oil Gains as Saudis Signal Confidence in Demand With Price Hike
© Reuters. Oil Gains as Saudis Signal Confidence in Demand With Price Hike

(Bloomberg) — Oil rose after Saudi Arabia boosted the prices of its crude, signaling confidence in the demand outlook despite the spread of the omicron variant of the coronavirus.

Futures in New York advanced 2% to trade near $68 a barrel. The kingdom increased its oil prices for customers in Asia and the U.S. for January, just days after the OPEC+ alliance agreed to boost output for the same month. Meanwhile, initial data on omicron from South Africa — the epicenter of the outbreak — doesn’t show a resulting surge of hospitalizations.

Oil capped a sixth weekly loss on Friday, the longest stretch of declines since 2018, following concerns about the outlook for energy demand as omicron led to renewed restrictions on travel. While OPEC+ decided to keep adding extra barrels to the market in January, the alliance essentially placed a floor under prices by giving itself the option to change the plan at short notice.

Saudi Aramco (SE:2222) raised its key Arab Light grade for customers in Asia by 60 cents from December to $3.30 a barrel above a benchmark, according to a statement from the state producer. That followed comments last week from Aramco Chief Executive Officer Amin Nasser that he was “very optimistic” about demand and that the market had overreacted to omicron.

©2021 Bloomberg L.P.

Source: Investing.com

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