Oil posted its sixth straight weekly gain, with prices trading near a seven-year high as crude makes a roaring start to 2022. 

West Texas Intermediate rose 2 per cent for the week as robust demand tightened global markets. As supply remains constrained, a chorus of Wall Street banks and oil executives are forecasting a return to US$100 oil. Additionally, heightened geopolitical risks driven by fears that Russia may invade Ukraine have also contributed to crude’s climb.

“Demand has been strong, supply has been struggling a little bit to keep up with that and that’s reflected in the market,” said Chevron Corp. Chief Executive Officer Mike Wirth on Bloomberg TV. Wirth added that geopolitical events are impacting the commodity market more now than they did in the past and that US$100 oil “is certainly within the realm of what we could see in the next few months.”

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Oil’s stellar start to the year comes despite a soft patch in global equity markets after the Federal Reserve signaled it’s ready to tackle inflation. For now, crude prices have defied the pull of weaker risk sentiment elsewhere, with consumption on the brink of returning to pre-pandemic levels. 

Attention will shift next week to the Organization of Petroleum Exporting Countries and its allies as they meet Feb. 2 to assess the market and decide on supplies for March. While OPEC+ has been steadily easing output curbs, there’s concern members have been unable to deliver the promised volumes in full.

“OPEC+ production has been gradually increasing, but still not enough to keep up with demand,” said Rohan Reddy, a research analyst at Global X Management, a firm that manages US$2 billion in energy related assets. Additionally, if Russia invades Ukraine, “there is certainly some upside for oil, because not only could sanctions factor in, but theoretically their position in OPEC+ would be threatened too, and they’ve been an important voice in the room there.”

Markets are also paying close attention to Ukraine on concern that Russia may launch an invasion after massing thousands of troops on the border, potentially disrupting energy supplies.


  • WTI for March delivery rose 21 cents to settle at US$86.82 a barrel in New York
  • Brent for March settlement climbed 69 cents to settle at US$90.03 a barrel.

In a sign of the market’s strength, prices remain heavily backwardated -- a bullish pattern whereby near-term contracts trade above those further out -- indicating tight immediate supply. WTIs prompt timespread was at US$1.39 a barrel in backwardation on Friday, up from 23 cents at the start of the month. 

As crude advances, key product prices have been dragged higher. Wholesale gasoline in the New York market has surged to the highest seasonal level in three decades of record-keeping. Average pump prices across the U.S. are headed for a monthly gain after jumping 46 per cent last year.

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