Oil prices choppy as WTI, Brent remain on track for annual increases

By Scott Kanowsky 

Investing.com -- Oil prices were choppy on Friday, as both the global and U.S. benchmark crude prices looked on track to finish 2022 with second straight annual gains.

By 06:47 ET (11:47 GMT), Brent crude was up 0.28% to $83.66 a barrel, while U.S. West Texas Intermediate crude edged higher by 0.05% to $78.45 per barrel. Trading volumes were below average levels, however, ahead of the New Year holidays.

Brent is now on pace to end the year more than 8% higher than its 2021 closing price of $77.24 a barrel, and U.S. WTI remains set to post a gain of a little over 4% compared to its prior year close of $75.21 per barrel. Both prices had previously increased by over 50% year-on-year in 2021, recovering from a COVID-impacted slide in demand in 2020.

Oil markets have been facing volatility throughout 2022, particularly since Russia's invasion of Ukraine in February led to fears over future supply constraints. At one point, the cost of Brent crude reached $139.13 a barrel, its highest level in fourteen years.

But prices moved down from these heights in the second half of the year, as a series of central bank interest rate hikes to combat soaring inflation sparked a strengthening in the U.S. dollar. This, in turn, turned up the costs investors faced for dollar-dominated commodities.

Demand from major crude importer China was also hit by stringent COVID-19 rules across the country, which Beijing has only just begun to relax. Optimism persists that the ease in restrictions in the world's second largest economy will release pent-up oil demand, although this has been tempered by reports of a widespread surge in cases.