© Reuters. Two oil pumps in Texas – Photo from Reuters archive
NEW YORK (Reuters) – Mixed events closed on Monday, with investors questioning whether supplies would come under pressure from the recent sharp increase in energy costs and the strength and rise of COVID-19 infections.
The global benchmark contracts ended the trading session down 12 cents, or 0.2 percent, to settle at $82.05 a barrel, while US West Texas Intermediate crude contracts rose eight cents, or 0.1 percent, to close at $80.88.
Oil prices were affected by the US dollar’s 16-month high against a basket of currencies, while investors were concerned about the global economy.
A stronger dollar would make green-currency-denominated commodities, such as oil, more expensive for buyers who use other currencies.
Last week, US energy companies added oil and natural gas rigs for the third week in a row, encouraged by a 65 percent increase in US crude prices since the beginning of the year.
US shale oil production is expected in December to reach pre-pandemic levels of 8.68 million barrels per day, according to Rystad Energy. On the other hand, there are indications that demand may slow due to the increase in coronavirus infections and rising inflation.
The Organization of the Petroleum Exporting Countries (OPEC) last week lowered its forecast for global oil demand for the fourth quarter by 330,000 barrels per day from its estimate last month, while high energy prices impede the economic recovery from the Covid-19 pandemic.
“The market now seems less concerned about the current tight supply, as you expect it to be short-lived,” said Louise Dixon, chief oil market analyst at Rystad.
“Traders are refocusing on two factors that will push the market lower… the possibility of more sources of oil supply and more COVID-19 infections.”
UAE Energy Minister Suhail Al Mazrouei said that all indicators point to an excess supply of oil in the first quarter of 2022.
(Prepared by Wagdy Al-Alfi for the Arabic Bulletin)
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