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Global demand fears force oil prices to fall below $80

Oil prices

Oil prices fell below $80 a barrel, due to concerns about weak global demand.

Fears of weak demand in light of the steady rise in Omicron infections are increasing fears of reduced supplies from Kazakhstan.

It should be noted that Brent crude fell 88 cents, or 1.1%, upon settlement to $80.87 a barrel.

US West Texas Intermediate crude also fell 67 cents, or 0.9%, to $78.23 a barrel. But in early trading, the two crudes rose by about 50 cents.

Oil prices

“Oil prices are following the stock market lower on Omicron fears,” said Phil Flynn, a senior analyst at Price Futures in Chicago.

The market also gave up gains made early in the session after Libya said its production was increasing.

Concerns about the Omicron variant seeped into the oil market, driving down prices.

Oil prices rose 5% last week after protests in Kazakhstan disrupted train lines and hit production in the country’s largest oil field, Tengiz.

While maintenance of a pipeline in Libya reduced production from 1.3 million barrels per day last year to 729,000 barrels per day.

Oil prices last week drew support from rising global demand, which has not been matched by increases in supply from the OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies.

OPEC production in December rose by 70,000 barrels per day from the previous month. This is much less than the increase allowed under the OPEC+ agreement of 253,000 barrels per day, which restored production cut in 2020 when demand collapsed under the COVID-19 closures.

OPEC increase

In a related context, OPEC+ producers continue to pump the monthly increase in supplies, which amounts to 400,000 barrels per day, with the participation of 23 producers. But doubts surround the ability of some producers to meet their shares in the production increase next February.

the consumption of crude oil and fuel continues to be at good levels, despite the high incidence of the pandemic, which appears to be less dangerous than the previous waves.

Oil analysts say that there is strong confidence in the market, whether from OPEC+ or from outside, reducing the possibility of Omicron variant affecting demand. Meanwhile, the turmoil in Kazakhstan caused a surge in energy as a result of concerns about crude oil exports from Kazakhstan.

Kazakhstan is an important part of the OPEC+ group and produces approximately 1.6 million barrels per day.

The crisis in Kazakhstan coincided with a drop in production from Libya, in addition to the expectation that the OPEC+ would continue monthly production increases of 400,000 barrels per day next February, which raised price gains.

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