RIYADH: Oil prices fell on Friday, trimming their biggest annual gains since 2016, with producers led by Saudi Arabia and Russia showing discipline on output as the global economy recovered from COVID-19.
Brent crude futures slid 1.3 percent to $78.52 a barrel as of about 3 p.m. Riyadh time, leaving it 52 percent higher in 2021, the most since 2016. WTI, the US benchmark, fell 1.5 percent to $75.87 a barrel, up 56.5 percent in the year, the biggest gain since 2009.
Brent reached $86.70 a barrel in October, the highest since 2018. WTO touched $85.41 in the same month, its highest price since 2014.
Price direction is unclear in 2022 as demand is expected to increase, while the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are set to continue adding 400,000 barrels a day of supply each month.
“We’ve had Delta and omicron and all manner of lockdowns and travel restrictions, but demand for oil has remained relatively firm,” Australian brokerage firm CommSec’s Chief Economist Craig James told Reuters. “You can attribute that to the effects of stimulus supporting demand and restrictions on supply.”
Prices declined on Friday amid soaring COVID-19 cases globally spurred by the more infectious omicron variant that has sent case numbers to records. The end of production outages in Nigeria and Ecuador also contributed to lower prices.
This year has capped a dramatic recovery for oil prices after they dipped into negative territory in April 2020 amid crashing demand for crude in the face of the COVID-19 pandemic.
Saudi Arabia has been praised for its controlled approach to supply that helped prices rebound even as demand remained weak.
OPEC and the entire energy industry should thank Saudi Arabia for helping oil prices recover from negative territory last year, and the market would be best left to the Kingdom to manage, Robert Yawger, executive director of Energy Futures at Mizuho Securities said in an interview on Bloomberg Television in July.
“They’ve done a magnificent job of managing their production program in the COVID era,” he said.
Negative oil prices were an “unprecedented event” and “left a terrible scar on the industry,” said Yawger. “It rallied back under the management of the Saudis. The rest of OPEC has a lot to thank them for. Anyone that has anything to do with energy has a lot to thank them for, for that matter.”