Volatile Year in Oil Markets Culminates with Modest Gain

Oil ended a volatile year modestly higher as investors look ahead to a potential rebound in Chinese demand next year.

West Texas Intermediate futures staged a last-minute rally in the final session of the year to settle above $80, marking a 4% annual gain. The finish was a far cry from the triple digits seen earlier this year after Russia’s invasion of Ukraine upended global supplies and sent prices soaring. 

The global Brent benchmark traded in a $64 range, the largest since 2008, and at times experienced the biggest weekly swings on record. Such stomach-churning volatility proved too much for many traders, curbing liquidity and further driving sharp swings. At its peak, oil futures traded past $139, but the gains largely evaporated given concerns that central bank efforts to curb inflation will bite into growth and uncertainty over China’s demand prospects. 

China is currently tackling surging virus cases and fears are mounting about a fresh global outbreak, but there’s optimism demand will eventually rebound in the world’s top crude importer.

Prices:

• WTI for February settled at $80.26 a barrel, higher by $1.86 on the day and $3.27 on the year
• Brent for March settled at $85.91 a barrel, higher by $3.65 on the day and $6.59 on the year