Sonali Paul

MELBOURNE, Reuters – Friday’s drop in oil prices was 1%. However, they are expected to make their largest annual gains since 2012, fueled by global economic recovery. This is due to producer restraint and COVID-19 slump. Infections rose to new heights all over the globe.

Futures ended 2021 up 53%. However, they were heading for an increase of 57%. This is the best performance since 2009. Prices soared over 70% in 2009 and futures are now on track for 53% growth.

We’ve seen Omicron, Delta and other travel restrictions and lockdowns but the demand for oil remains relatively strong. Craig James, Chief Economic Officer at CommSec, said you can blame that on the stimulus supporting demand and restricting supply.

After rising for several days straight, however, oil prices stopped falling Friday due to COVID-19 pandemic cases that rose to unprecedented heights around the world, including in Australia and the United States. This was fueled by Omicron coronavirus, which is highly transmissible.

Brent crude oil futures dropped 86cs or 1.1% to $78.67 a bar, while U.S. West Texas Intermediate crude crude futures plummeted 80cs or 1% to $76.19 a bar.

U.S. experts advised Americans to be prepared for serious disruptions over the next weeks. Infection rates are likely to increase due to increased holiday travel and New Year celebrations, as well as school reopenings after winter break.

James indicated that, with oil at near $80 per barrel, he believes the Organization of the Petroleum Exporting Countries and Russia, collectively called OPEC+ will stick to their plans to increase 400,000 barrels of production each month. This is despite them continuing to reverse sharp cuts in production implemented in 2020.

James stated that he believes there will be a lot more pressure on OPEC+ in order to ensure sufficient oil is being delivered to the market.