Crude Oil Edges Lower; Remains Near 2-Month Highs By

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(updates with settlement prices)

By Peter Nurse — Oil prices edged lower Thursday after disappointing U.S. unemployment data, but remained near two-month highs, helped by expectations that global supply will remain tight as the economic recovery continues. 

The benchmark for U.S. crude settled down 52 cents, or 0.6%, at $82.12 per barrel.

London-traded , the global benchmark for oil, settled down 20 cents, or 0.2%, at $84.47.

The number of Americans filing new claims for unemployment benefits unexpectedly rose in the first week of January, with  for state unemployment benefits increasing 23,000 to a seasonally adjusted 230,000 for the week ended Jan. 8. This figure suggests that the rise in Covid-19 cases is having an impact on the U.S. economic recovery, but the claims remain below their pre-pandemic level.

Oil prices have generally been buoyant so far this year, continuing the 2021’s substantial gains, buoyed by expectations that a strong economic recovery will boost demand, particularly as concerns over the Omicron Covid variant ease. 

Adding to this have been concerns about the speed top producers are adding supply back into the market, with the Organization of the Petroleum Exporting Countries and their allies, including Russia, a group known as OPEC+, struggling to meet their output increase promises.

“Sentiment has been broadly constructive since the start of the year due to a number of supply disruptions and growing concerns over OPEC spare capacity,” said analysts at ING, in a note.

Large consumer nations also appear to be running out of space to sell from their strategic reserves.

According to Tanker Trackers’ Samir Madani, the latest U.S. Energy Department sale reduces the Strategic Petroleum Reserve’s holdings to less than 100 days of import cover. International agreements require the U.S. and other advanced economies to hold at least 90 days’ worth of imports.

Gains were tempered Thursday after data from the U.S. Energy Information Administration in the previous session showed increasing by 8 million barrels last week, suggesting that U.S. drivers were being impacted by the Omicron surge.

Covid-19 hospitalizations in the United States have increased by about 33% and deaths are up by about 40% from a week earlier, the head of the U.S. Centers for Disease Control and Prevention said on Wednesday.

That said, the recent increase in deaths is likely a lagging effect of the Delta variant, which was surging before Omicron took hold in the United States in December, said Dr. Rochelle Walensky, CDC director.

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