rose Oil prices, on Friday, are on track to post gains for the second straight yearalbeit scarce, in a year characterized by supply shortages due to the conflict in Ukraine, a strong dollar and weak demand from China, the world’s largest importer of crude oil.
Brent futures rose 44 cents, or 0.5%, to $83.9 a barrel by 01:38 GMT, after falling 1.2% in the previous session.
US West Intermediate crude oil was $78.88 a barrel, up 48 cents, or 0.6%, after closing down 0.7% on Thursday.
Brent crude oil is expected to end 2022 with gains of 5.76%, after surging 50.2% in 2021.
Prices climbed in March to a peak of $139.13 a barrel, a level not seen since 2008, after Russia invaded Ukraine and raised concerns about energy supplies and security.
WTI is also on track to rise 4.5% in 2022 after gaining 55% in 2021.
“2022 was a banner year for commodity markets, as sourcing risks led to higher volatility and higher prices,” said ING analyst Ewa Manthi.
“Next year will be another year of uncertainty with many ups and downs,” he added.
Oil prices fell rapidly in the second half of this year as central banks around the world raised interest rates to fight inflation and the appreciation of the dollar.
This made dollar-denominated commodities a more expensive investment for holders of other currencies.
China’s coronavirus restrictions, which were only eased in December, also dashed hopes of a recovery in oil demand for the world’s second-largest crude consumer.
While oil demand in China is expected to recover during 2023, the high incidence of “Covid-19” in it and fears of a global recession are hampering commodity demand expectations.
John Driscoll, director of JTD Energy Services, an energy consultancy, said: “The recent easing of travel restrictions was expected to boost demand for oil, however, the sharp rise in coronavirus cases in China has raised serious concerns about a potential global outbreak.
In terms of supplies, Western sanctions will prompt Russia to divert more exports of raw and refined products from Europe to Asia.
In the United States, output growth slowed in the major oil-producing countries despite rising prices.
