The crude oil market has been running hot lately and is showing no signs of cooling, based on the latest trading insight from Bloomberg.
Traders seem to have largely brushed off any adverse effects the Omicron wave might have on demand for crude and with a good reason: demand on the physical market has remained robust.
The report cited the latest price movements for two Russian grades, Sokol and ESPO, the latter enjoying the particular favor of Chinese refiners, as well as the rising premium in Dubai crude contracts.
Besides physical demand strength, oil prices have recently benefited from other factors as well, the latest among them a spike in Middle Eastern tensions after a Houthi attack on the United Arab Emirates.
The Yemeni rebel group claimed an attack that blew up three tanker trucks and killed three people this week and warned it may not be the last one. In response, the UAE said it reserved the right to "respond to these terrorist attacks," as quoted by Reuters.
"Analyst forecasts expect demand to outstrip supply this year as the world opens up from 2 years of lockdowns and resumes a more normal trajectory for demand," CMC Markets analyst Ash Glover told Reuters.
"This is such a perilous time right now in the oil market," Helima Croft, global head of commodity strategy at RBC Capital Markets, told the Financial Times. "We are in the oil red zone for President [Joe] Biden who is absolutely preparing to ask Opec for more barrels."
Brent crude has added more than 10 percent since the start of the year to trade at close to $88 per barrel at the time of writing. West Texas Intermediate, the U.S. benchmark, has also risen steadily in recent weeks, booking a gain of 12 percent since the start of 2022.
By Irina Slav for Oilprice.com
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