Oil rises on views OPEC+ may pause supply addition amid omicron fears
Oil prices rose on Thursday, reversing the previous day’s losses, on expectations OPEC+ may pause supply additions amid growing concern the spread of the omicron coronavirus variant could weigh on the global economy and fuel demand.
U.S. West Texas Intermediate (WTI) crude futures gained 48 cents, or 0.7%, to $66.05 a barrel by 0140 GMT, after a 0.9% drop on Wednesday.
Brent crude futures were up 48 cents, or 0.7%, at $69.35, having eased 0.5% in the previous session.
“Oil prices climbed as some investors anticipate that OPEC+ will decide to maintain the current supply levels in January to cushion any damage on demand from the omicron spread,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, will likely decide on Thursday whether to release more oil into the market as previously planned or restrain supply.
Since August, the group has been adding an additional 400,000 barrels per day (bpd) of output to global supply each month, as it gradually winds down record cuts agreed in 2020.
The new variant, though, has complicated the decision-making process, with some observers speculating OPEC+ could pause those additions in January in an attempt to slow supply growth.
Omicron is rapidly becoming the dominant coronavirus variant in South Africa less than four weeks after it was first detected there. On Wednesday, the United States became the latest country to identify an omicron case within its borders.
Global oil prices have lost more than $10 a barrel since last Thursday when news of omicron shook investors.
U.S. Deputy Energy Secretary David Turk said President Joe Biden’s administration could adjust the timing of its planned release of strategic crude oil stockpiles if global energy prices drop substantially.
Gains in oil markets on Thursday were capped as the U.S. weekly inventory data showed U.S. crude stocks fell less than expected last week, while gasoline and distillate inventories rose much more than expected as demand weakened.
Crude inventories fell by 910,000 barrels in the week to Nov. 26, the Energy Information Administration (EIA) said, compared with analyst expectations in a Reuters poll for a drop of 1.2 million barrels.