Jessica Jaganathan

SINGAPORE, (Reuters) – Oil prices rose Thursday due to U.S. implied petroleum demand rising to a record in the top oil consumer world. This was despite the Omicron coronavirus threat to reduce oil consumption worldwide.

Prices were also raised by the U.S. Federal Reserve’s signal to combat inflation before it devastates the U.S. Economy.

By 0116 GMT futures rose to $74.68/barrel, an increase of 80 cents. U.S. West Texas Intermediate oil futures rose to $71.75, or 1.2%.

“Despite the current virus surge, the weekly EIA oil inventory report showed demand for petroleum products hit a record high, crude exports bounced back and national crude stocks posted a larger-than-expected draw,” said Edward Moya, senior analyst at OANDA.

While the current Omicron wave might lead to restricted measures in the U.S.A, lockdowns which were implemented during peak pandemics will be not revisited.

According to the U.S. Energy Information Administration, inventories fell by 4.6 millions barrels during the week ending Dec. 10. This was double the expectations of Reuters for a drop in inventories of 2.1 million barrels.

The supply of product by refineries (a proxy for the demand) increased to 23.2 million barrels per hour (bpd) in recent weeks due to higher gasoline, diesel, and other refined products.

Analysts stated that the surge is due both to holiday traveler expectations and to the ease in supply chain bottlenecks, which means more trucks are able deliver goods.

In the meantime, Federal Reserve stated that they would stop purchasing bonds during the pandemic and raise interest rates in March. This is because inflation has been rising and unemployment remains low.

Price gains were hampered by persistent worries about the coronavirus.

Britain and South Africa had record COVID-19 daily cases. Omicron is spreading quickly. Numerous firms all over the world now ask employees to work at home. This may help limit oil demand.