Oil Up, Set for Sixth Weekly Gain as Tight Market Concerns Continue

© Reuters.

By Gina Lee

AiVIF.com – Oil was up on Friday morning in Asia and was set for a sixth consecutive weekly gain. Concerns over a tightening market remain as major producers continue their policy of limited output increases even as fuel demand increases.

Brent oil futures were up 0.31% to $88.44 by 11:19 PM ET (4:19 AM GMT) and WTI futures gained 0.45% to $87. Both Brent and WTI futures are set for their sixth week of gains, the longest weekly streak since October 2021.

The black liquid has gained around 15% in 2022 to date, thanks to geopolitical tensions in Eastern Europe and the Middle East. Tensions between Russia, the world's second-largest oil producer, and Western powers over Ukraine and threats to the United Arab Emirates from Yemen's Houthi movement have raised concerns about energy supply.

"Where Brent crosses the $90 mark, we see some selling from a sense of accomplishment, but investors start buying again when the prices fall a little as they remain cautious about possible supply disruptions due to rising geopolitical tensions," Nomura Securities senior economist Tatsufumi Okoshi told Reuters.

"The market expects supply will stay tight as the OPEC+ is seen to keep the existing policy of gradual increase in production," he added.

Also on investors radars is the Organization of the Petroleum Exporting Countries and allies (OPEC+)’s next meeting, scheduled for Feb. 2, 2022. The cartel is expected to continue with a planned rise in its oil output target for March, according to Reuters.

An increase in oil output by producer nations cashing in on increasing prices depleted the spare capacity that cushions the markets from sudden shocks. This has also increased the risk of price hikes and even fuel shortages.

In Asia Pacific, China’s crude oil imports could rebound by as much as 7% in 2022, according to analysts and oil company officials. The world’s top oil importer is slowly reversing a rare decline recorded in 2021, with buyers increasing purchases for new refining units and replenishing low inventories, they added.