U.S. crude reversed its longest winning streak since February, but bulls still had the upper hand after demand continued unabated

In the European market on Thursday (December 30), after the longest rise since February this year, U.
S.
crude oil futures oil prices edged lower and are currently trading near
$76 per barrel.
It remained near the more than one-month high set the previous day
.
Looking ahead, analysts expect oil prices to be range-traded
in the first half of 2022 amid the risk of increased supply and pandemic-induced lockdowns.
However, oil prices are still expected to hit the $100 mark
, driven by the prospect of a strong recovery in demand.

Countries are trying to balance a surge in Omicron cases with an open economy

Data from Wednesday (December 29) showed that the number of new coronavirus infections worldwide reached a record high in the past seven days, the Omicron variant virus spiraled out of control, and governments tried to contain its spread
without paralyzing fragile economies.

Between 22 and 28 December, an average of nearly 900,000 cases
were detected per day globally.
Some countries, including Argentina, Australia, Bolivia, the United States and many European countries, have reportedly hit record highs
in the last 24 hours.

Studies have shown that Omicron has a lower
lethality rate than some previous variants.
But a sharp increase in the number of people testing positive could overwhelm hospitals in some countries, while the large number of infected people being required to quarantine is making it difficult
for businesses to operate.

Currently, Omicron cases in the United States are increasing significantly, but judging by the indications shown by the weekly US government report, this does not appear to be hampering fuel consumption and demand
for crude oil in the United States.

The EIA report showed a decline in U.
S.
crude oil and fuel inventories

U.
S.
crude inventories, gasoline and distillate inventories fell in the week ended Dec.
24, while U.
S.
oil production rose to its highest level
since May 2020, the U.
S.
Energy Information Administration reported on Wednesday.

U.
S.
crude inventories fell by 3.
6 million barrels last week to 420 million barrels, compared with analysts' estimates of a 3.
1 million barrel
reduction.
U.
S.
gasoline inventories fell by 1.
5 million barrels this week to 222.
66 million barrels, compared with an increase of 500,000 barrels
expected by analysts polled by Reuters.

Distillate inventories, including diesel and heating oil, fell by 1.
7 million barrels this week to 124.
2 million barrels, compared with an expected increase of 200,000 barrels
, EIA data showed.
Distillate inventories declined, particularly in the Midwest and Gulf Coast, where they fell to their lowest levels
since December 2020 and July 2019, respectively.
Meanwhile, oil production rose to 11.
8 million barrels per day, the highest level
since May 2020.

The market remains risky in the short term, but October 2022 is expected to hit triple-digits

The decline in crude oil, gasoline and distillate inventories suggests that the Omicron breakthrough has not had a significant impact
on U.
S.
fuel demand.
Supported by this optimistic outlook, technical analyst James Hyerczyk expects limited oil price declines during the day
.
Looking ahead, Hyerczyk expects the global economy to remain moving
forward.
He believes that the biggest risk to the oil market right now is that governments have introduced new restrictions in response to the pandemic, bringing the economy to a standstill
.
For example
, vaccination regulations for air travel in the United States.

Another big risk is the rise
in U.
S.
oil production.
If oil prices continue to rise in the first quarter, combined with an increase in OPEC+ production, we could see a small oversupply that will limit oil prices
.
But a surge in global demand could also help support the oil market
.
As a result, oil prices are expected to remain range-traded
in the first half of 2022 under the intertwined influence of the two.

But Hyerczyk expects a strong demand recovery to eventually outpace supply, and analysts expect a supply gap in the market in October 2022, increasing the likelihood that
crude prices will reach $100/b.