Oil prices ended higher on Friday in the final session of a year marked by Russia’s invasion of Ukraine, recession fears and the Covid-19 pandemic in China, which caused sharp moves in the over the months. The barrel of Brent from the North Sea for delivery in March, which is the first day of use as a benchmark contract, rose 2.93% to 85.91 dollars. Its American equivalent, the barrel of West Texas Intermediate (WTI) for delivery in February, gained 2.37%, returning above 80 dollars a barrel for the first time since the beginning of the month, at 80.26 dollars.
Over the year, prices were up 10.45% for Brent and 6.82% for WTI. But they have lost almost 40% of their value from the peaks recorded in March, in the first weeks of the war in Ukraine. Sanctions targeting Russia, one of the world’s largest hydrocarbon producers, initially sent prices soaring, but fears over supply gave way to concerns over demand, Han Tan said. , analyst at Exinity.
Prospects of recession across the world and tighter monetary policies weighed on prices. On Friday after a tumultuous year, the market is wondering if this rise is linked to the latest rather positive economic data.
What are the factors that can explain this increase?
The rise in oil prices is mainly due to the agreement between member and non-member countries of the Organization of the Petroleum Exporting Countries (OPEC) which was held in mid-December 2019. The agreement allowed the main producers international and national organizations to unite their efforts in order to stabilize the markets. Such a decision had a positive impact on oil prices as it limited supply and helped to increase its demand.
In addition, some relatively positive macroeconomic data published in recent months may explain this increase. Indeed, after having fallen sharply during the confinement imposed by Covid-19 in China at the end of 2020 and the beginning of 2021, certain indicators show that economic activity is gradually recovering, in particular those linked to the manufacturing industry, where there is a very clear increase in orders.
