(Bloomberg) — Oil headed for a fourth straight weekly gain, the longest winning streak since October, on signs that the market is tightening as global consumption withstands the impact of the omicron virus variant.
West Texas Intermediate dipped below $82 a barrel in early Asian trading, but was almost 4% higher this week. The American benchmark has made a strong start to the year as U.S. nationwide inventories fell to the lowest since 2018.
Crude has now clawed back most of the losses late last year that were driven by omicron and the White House-led releases from national reserves. Although it’s proved to be fast-spreading, the variant is also milder, lessening the impact on energy consumption. The International Energy Agency said earlier this week that global oil demand has proven stronger than expected.
Oil prices have benefited from a confluence of other supportive factors, including interruptions to supplies in producers such as Libya and Kazakhstan. There’s also concern the Organization of Petroleum Exporting Countries and its allies are unable to deliver their planned monthly increases in output in full.
Optimism about the outlook is reflected in the market’s bullish backwardated pricing structure, with near-term contracts above those further out. The spread between WTI’s two nearest December contracts has expanded for six weeks and is now more than $6 a barrel, up from less than $3 in early December.
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