Oil rallies with equity markets before U.S. releases energy data

Oil recovered as European equities bounced back, with crude continuing to follow the fortunes of wider markets in the first weeks of 2022.

West Texas Intermediate added 1.7 per cent as stock markets in Europe rallied and the dollar weakened. The industry-funded American Petroleum Institute will release its weekly U.S. oil inventories report later Tuesday, while the Energy Information Administration is set to publish its monthly market outlook. 

Oil has made a positive start to 2022 on expectations demand will continue to expand as the pandemic evolves, tightening the market. Supply halts in Libya and Kazakhstan have also aided prices, though crude has largely followed movements in wider markets at the start of the year.

“With the absence of major news or data release, oil prices continue to move on equity-market volatility,” said Keshav Lohiya, founder of analytics firm Oilytics. 

Prices

  • WTI for February delivery advanced 1.7 per cent to $79.53 a barrel at 10:19 a.m. London time.
  • Brent for March settlement gained 1.6 per cent to $82.14 a barrel.

Diesel markets in Europe and the U.S. are currently among the strongest oil-product sectors. Profits from turning crude into the fuel are at their highest since October in both regions as winter demand picks up, remaining relatively robust in the face of the omicron virus variant. 

In China, the largest crude importer, the authorities have locked down a city of 5 million people, a day after detecting omicron in Henan province. The move underscores the nation’s commitment to eliminating COVID-19 even as highly transmissible variants circulate.

While the country is due to host the Winter Olympics next month, there are no plans yet to adjust measures for the high-profile event. 

© 2022 Bloomberg L.P.

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