Oil prices rose on Tuesday, nonetheless, price gains saw a cap due to investor worries about oil demand amid a rise in coronavirus cases.
Brent crude futures gained 1% to $74.70 a barrel by 01:13 GMT. U.S. West Texas Intermediate (WTI) crude futures advanced 1 cent to $71.30.
Governments around the globe were tightening restrictions to limit the spread of the omicron variant. In the U.K., at least one person died after contracting the omicron coronavirus variant.
On Tuesday, the Asian Development Bank reduced its growth forecasts for developing Asia for 2021 as well as 2022. It trimmed forecasts due to risk and uncertainty created by the omicron coronavirus variant, which could also hamper oil demand. Nonetheless, OPEC raised its world oil demand forecast for the first quarter of the next year. The organization expects demand to reach 100 million barrels per day by the third quarter of 2022.
Oil market and IEA
The International Energy Agency reduced its outlook by 100,000 barrels per day for both remainder of this and 2022.
The agency now expects the oil demand to rise by 5.4 million barrels per day in 2021 and 3.3 million barrels per day in 2022. However, the International Energy Agency expects the omicron variant to affect the demand for oil. Authors of the Oil Market Report noted that the emergence of the variant already brought about new restrictions. Nonetheless, the agency added that the recovery that is already underway was not expected to be completely derailed.
In spite of the uncertainty, the agency expects production to outpace demand from December. According to the IEA, this upward trend would extend into 2022, with the U.S., Canada, as well as Brazil set to pump at their highest annual levels ever.