Oil prices have risen ahead of the OPEC meeting, despite concerns from Omicron
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Author: Shadia Nasralla
LONDON (Reuters) – Oil prices rose more than 4% on Wednesday as major producers were ready to discuss future production on the back of a new coronavirus variant Omicron, triggering new travel restrictions that could dampen oil demand.
Stock markets, which often move along with oil prices, also bounced back when investors bought a fall from the previous session, believing that Omicron would not prevent an economic recovery.
February futures rose $ 3.25 or 4.7% to $ 72.48 a barrel at 1241 GMT.
US futures for West Texas Intermediate (WTI) rose $ 3.01, or 4.6%, to $ 69.19 a barrel. In November, Brent and WTI’s previous month’s contracts had the largest monthly declines in percentage terms since March 2020, down 16% and 21%, respectively.
The Organization of the Petroleum Exporting Countries (OPEC) will meet on Wednesday after 1300 GMT and on Thursday before the OPEC + meeting, which brings together OPEC Russia’s allies.
Some analysts expect OPEC + to suspend plans to add 400,000 barrels per day of supply in January. 2022 is expected to lead to a supply surplus, albeit at current levels of demand.
“There is much to suggest that OPEC + will not further increase oil production initially, in an effort to keep current prices at around $ 70 / bbl,” said PVM analyst Stephen Brennock.
“OPEC + has been on the side of prudence since it slowly began to increase supplies and decided to increase production in January and maintain flat quotas with its prudent approach.”
Several OPEC + ministers, however, said there was no need to change course.
But while OPEC + agrees to continue with the planned increase in January, it is likely to add so much to producers.
A Reuters poll found that OPEC pumped 27.74 million bpd in November, 220,000 bpd more than the previous month, but that was below the 254,000 bpd increase allowed for OPEC members under the OPEC + agreement.
In a downward signal of demand, data from the American Petroleum Institute industry group fell 747,000 barrels in the week ended Nov. 26, according to market sources, a smaller-than-expected decline.
Government warehouse data is required at 1530 GMT. [EIA/S]
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