Oil prices climb on Friday on expectations of drop in Russian crude exports from the Baltic region in December. This offsets the worries that a looming Arctic storm across the US could snuff out transport fuel demand growth this holiday season.
Brent crude rose 88 cents, or 1.1 per cent, to $81.86 a barrel by 0148 GMT. While US West Texas Intermediate crude was at $78.41 a barrel, up 92 cents, or 1.2pc higher.
Russia’s oil exports may fall by 20pc in December from the previous month following EU and G7 sanctions and a price cap imposed on Russian crude.
“Crude prices are higher as energy traders focus on Moscow’s response to the price cap put on Russian oil. And not so much to the thousands of flight cancellations that will disrupt holiday travel,” Oanda analyst Edward Moya said.
More than 4,400 US flights were cancelled over a two-day period due to the winter storm. This coincides with a holiday travel season that some predict could be the busiest ever.
Oil prices on both sides of the Atlantic settled lower on Thursday with scrapping flights. The snowstorm could also upend motorists’ plans to travel during Christmas and New Year, curbing gasoline consumption.
However, rising oil demand may increase as the extreme weather is may cause power outages.
Moya said, “This Arctic storm will result in many disappointed travelers. But shows that we are getting closer to normal travel behaviors.”
Brent and WTI will post a second weekly gain. Expectations of an oil demand recovery in the future underpin the gain owing to China’s 2nd highest consumption.
However, surging Covid-19 cases, concerns about further rate hikes globally and recession curbing fuel consumption restrict oil price gains.
“The oil market’s biggest wildcard is China. And optimism is still strong that the reopening will continue and eventually lead to more demand,” Moya said.