LONDON: Oil prices rallied on Wednesday after recent sharp drops as major producers started to discuss future output against the backdrop of the Omicron variant of the coronavirus triggering fresh travel restrictions which could dampen oil demand.
Equity markets, which often move in tandem with oil prices also rebounded as investors bought the previous session’s dip in the hope that Omicron would not derail an economic recovery.
Brent crude futures rose $2.10, or 3%, to $70.85 a barrel at 1331 GMT.
U.S. West Texas Intermediate (WTI) crude futures rose $1.91, or 2.9%, to $67.65 a barrel. Both contracts retraced some of their gains after an OPEC+ document showed the group forecasts a bigger oil surplus in the new year.
Both Brent and WTI front-month contracts in November posted their steepest monthly falls in percentage terms since March 2020, down 16% and 21% respectively.
The Organization of the Petroleum Exporting Countries started a meeting around 1320 GMT, ahead of a meeting on Thursday of OPEC+, which groups OPEC with allies including Russia. read more Some analysts expect OPEC+ to pause plans to add 400,000 barrels per day of supply in January.
OPEC+ sees the oil surplus worsening to 2 million barrels per day (bpd) in January, 3.4 million bpd in February and 3.8 million bpd in March next year, an internal report seen by Reuters showed. read more “There is much to suggest that OPEC+ will not initially step up its oil production any further in an effort to maintain current prices at around $70/bbl,” PVM analyst Stephen Brennock said.
“OPEC+ have erred on the side of caution since it began slowly boosting supplies and a decision to shelve a planned increase output in January and keep its quota flat comports with its cautious approach.” — Reuters
