Oil set to end turbulent 2022 higher

Oil prices traded higher on Friday and were on track to post their second straight annual gains.

Oil had a stormy year marked by tight supplies due to the Ukraine war, a strong dollar and weakening demand from China.

U.S. West Intermediate crude traded around $78.00 a barrel. It is on track to rise 4.5% in 2022, following a 55% gain last year.

The US oil benchmark reached a 14-year high of $130 per barrel in March as Russia invaded Ukraine.

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These are the gas prices at a pump at a Sheetz store in Sewickley, Pa., Monday, March 7, 2022. (AP Photo/Gene J. Puskar / AP Newsroom)

The jump in oil prices translated into pain at the pump as the price for a gallon of regular gasoline hit an all-time high of $5.016 on June 14. 

Brent crude futures traded around $82.00 a barrel. Brent looked set to end the year with a 7.6% gain, after jumping 50.2% in 2021. 

Prices surged in March to a peak of $139.13 a barrel, a level not seen since 2008.

Oil prices cooled as central banks across the world hiked interest rates to fight inflation, boosting the U.S. dollar. 

Silhouette of working oil pumps on sunset background (iStock / iStock)

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That made dollar-denominated commodities a more costly investment for holders of other currencies.

Also, China’s zero-COVID restrictions, which were only eased in December, squashed oil demand recovery hopes for the world’s No. 2 consumer. 

Storage tanks are seen at Marathon Petroleum’s Los Angeles Refinery. (REUTERS/Bing Guan / Reuters Photos)

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While China is expected to slowly recover in 2023, a surge in COVID cases in the country and global recession concerns are clouding the commodities demand outlook.

Reuters contributed to this report.