Benchmark crude futures continued to rally on Tuesday, December 7, albeit at a slower pace. By the close, Brent advanced 2% to $74.87/bbl, while WTI jumped 2.4% to $71.47/bbl, consolidating above the psychologically important $70/bbl level.
Fears stemming from the impact of the Omicron variant on the global economy have apparently already been priced into oil prices, but the cold snap in Europe is just starting to bite. The US Department of Energy in a report released yesterday estimated global oil demand in November at 99.7 mln bbl, which is 5% higher than in the same month last year, and also reduced its forecast for US oil output in 2021 by 50,000 bpd to 11.18 mbpd. These numbers likely convinced investors that the oil market could be heading for an oil shortage.
This morning, oil prices reverted to a downward correction, although the correction looks rather uncertain. By the time of writing, Brent was off 0.42% at $75.12, while WTI was down 0.51% at $71.66. Our Brent price forecast for today in the range of $73.8-75.0/bbl.