Oil Rises on OPEC+ Plan to Meet if Omicron Hits Demand

By Roslan Khasawneh and Sonali Paul
Friday, December 3, 2021

Oil prices climbed on Friday, extending gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron variant dents demand, but prices were still on course for the sixth week of declines.

Brent crude futures rose $1.34 cents, or 1.9%, to $71.01 a barrel by 0752 GMT, after climbing 1.2% in the previous session.

U.S. West Texas Intermediate (WTI) crude futures rose $1.38, or 2.1%, to $67.88 a barrel, adding to a 1.4% gain on Thursday.

The Organization of the Petroleum Exporting Countries, Russia and allies, together called OPEC+, surprised the market on Thursday when it stuck to plans to add 400,000 barrels per day (bpd) supply in January.

"Unless we get a major Omicron escalation...this week’s lows for Brent and WTI likely represent the lows for the medium-term," Jeffrey Halley, senior analyst at OANDA said.

However, the producers left the door open to changing policy swiftly if demand suffered from measures to contain the spread of the Omicron coronavirus variant. They said they could meet again before their next scheduled meeting on Jan. 4, if needed.

That boosted prices with "traders reluctant to bet against the group eventually pausing its production increases," ANZ Research analysts said in a note.

Wood Mackenzie analyst Ann-Louise Hittle said it made sense for OPEC+ to stick with their policy for now, given it was still unclear how mild or severe Omicron turns out to be compared with previous variants.

"The group's members are in regular contact and are monitoring the market situation closely," Hittle said in emailed comments.

"As a result, they can react swiftly when we start to get a better sense of the scale of the impact the Omicron variant of COVID-19 could have on the global economy and demand."

The market has been roiled all week by the emergence of Omicron and speculation that it could spark new lockdowns, dent fuel demand and spur OPEC+ to put its output increases on hold.

For the week, Brent was poised to end down about 2.4%, while WTI was on track for a 0.4% drop, with both heading lower for a sixth straight week for the first time since November 2018.

JPMorgan analysts said the market fall implied an "excessive" hit to demand, while global mobility data, excluding China, showed that mobility is continuing to recover, averaging at 93% of 2019 levels last week.

"So far we see no signs of demand weakening on (a) global scale," JPMorgan commodities analysts said in a note.

(Reporting by Roslan Khasawneh and Sonali Paul; editing by Richard Pullin and Kim Coghill)

Categories: Energy Activity Production Oil Price

Related Stories

India Stretches Bids Deadline for 13 Offshore Deep-Sea Mineral Blocks

Pakistan’s OGDC to Start Production at ADNOC’s Offshore Block by 2027

Petrovietnam, Petronas Extend PSC for Offshore Block

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Starts Production at Two New Oil and Gas Projects

Cairn India Might Invest in US Oil Servicing Firms to Increase Production

All Gas from Conrad’s Mako Field to be Sold to Indonesia’s PLN

Japan and South Korea Look to Partner Up with US for Alaska Pipeline

Valeura Wraps Up Infill Drilling Campaign in Gulf of Thailand

Current News

MODEC, Sumitomo Partner Up for Delivery of Gato do Mato FPSO

Chuditch Gas Field Up for Summer Drilling Ops as Sunda Reshapes Ownership Structure

EnQuest Bags Two Production Sharing Contracts off Indonesia

Hanwha Drilling’s Tidal Action Drillship En Route to Petrobras’ Roncador Field

China's ENN, Zhenhua Oil Ink LNG Supply Deals with ADNOC

MODEC Wins ExxonMobil Guyana’s Hammerhead FPSO Contract

India Stretches Bids Deadline for 13 Offshore Deep-Sea Mineral Blocks

Indonesia Awards Oil and Gas Blocks to Boost Reserves

Sapura Energy Nets $22.6M in Offshore Support Vessel Contracts

CNOOC Puts Into Production New Oil Field in South China Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com