Melbourne, Nov. 30 (BNA): Oil prices rose on Tuesday, extending their recovery from last week’s decline amid growing expectations that major producers will halt plans to add crude supplies in January amid uncertainty over the severity of the Omicron coronavirus variable.
Brent crude futures rose 43 cents, or 0.6 percent, to $73.91 a barrel at 04:18 GMT, after rising 1 percent on Monday. US West Texas Intermediate crude futures jumped 73 cents, or 1%, to $70.68 a barrel, extending its 2.6% gain on Monday.
Oil fell about 12% on Friday with other markets on fears that the heavily transformed Omicron could cause fresh closings and weigh on global growth.
The World Health Organization said on Monday that Omicron poses a very high risk of increased infection, and several countries have stepped up travel restrictions. Reuters reported that it is still not clear how dangerous the new alternative is and whether it can resist current vaccines.
Clouded by the demand outlook, expectations are growing that the Organization of the Petroleum Exporting Countries (OPEC), Russia and its allies, together called OPEC+, will suspend plans to add 400,000 barrels per day of supplies in January.
“We believe the group will be leaning towards halting production increases temporarily in light of the Omicron variable and the release of oil stocks by major oil consumers,” Vivek Dar, commodities analyst at the Commonwealth Bank, said in a note.
Pressure was already building within OPEC+, which is due to meet on December 2, to reconsider the supply plan after last week’s release of emergency crude oil reserves by the United States and other major oil consuming countries to tackle high prices.
“Following the releases of the Global Strategic Reserve and the announcement by dozens of countries of restricting travel to and from South Africa and neighboring countries, OPEC and its allies could justify stopping production or even a small production cut,” said Edward Moya, an analyst at OANDA. note.
However, Citi OPEC analysts expect that OPEC+ will continue to add more barrels in January.
“Citi calculates that the actual average monthly additions of OPEC+ amounted to 262 thousand barrels per day instead of 400,000 barrels per day, given that many OPEC + countries were unable to produce at their standards because they lost capacity due to lack of investment,” the bank said in note.
“This discrepancy means that withholding this amount will be largely meaningless in the global oil supply/demand balance.”
Among the factors weighing on the market is the possibility of resuming oil exports from Iran, after optimistic statements from diplomats with the resumption of talks on Monday between world powers and Iran on reviving the nuclear deal.
HF