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Oil prices rose Friday, posting a second straight year of gains, albeit paltry, in a year marked by limited supplies due to the conflict in Ukraine, a strong dollar and weak demand from the world’s largest crude oil importer China, Reuters reported.
Brent crude futures rose 44 cents, or 0.5%, to $83.90 a barrel by 1:38 p.m. GMT after falling 1.2% in the previous session.
U.S. West Intermediate crude was trading at $78.88 a barrel, up 48 cents, or 0.6%, after a 0.7% decline Thursday.
Brent will finish 2022 up 5.76% after rising 50.2% in 2021. Prices rose to a peak of $139.13 a barrel in March, a level not seen since 2008, following a war in Ukraine that raised concerns about supplies and energy security.
WTI could rise 4.5% in 2022 after rising 55% last year.
Oil prices fell quickly in the second half of this year as central banks around the world raised interest rates to fight inflation and strengthened the U.S. dollar. This has made dollar-denominated goods a more expensive investment for holders of other currencies.
In addition, China’s COVID-19 restrictions, which were only eased in December, have undermined hopes for a rebound in oil demand from the world’s second largest consumer. While China is expected to recover in 2023, a spike in COVID cases in the country and fears of a global recession are clouding the outlook for commodity demand.
The recent easing of travel restrictions was expected to boost oil demand, but a surge in COVID cases in China has raised serious concerns about a potential global outbreak, said John Driscoll, director of consulting firm JTD Energy Services.
Western sanctions will force Russia to divert more crude and petroleum product exports from Europe to Asia.
In the United States, production growth in leading oil-producing states has slowed despite higher prices. Inflation, supply chain problems, and economic uncertainty have caused executives to lower their expectations.
