Tokyo, Nov. 29 (BNA): Oil prices rebounded on Monday as investors looked for bargains after Friday’s slump amid speculation that OPEC+ may pause production increases in response to the Omicron spread, but the mood remained cautious with little information on a new variable.
Brent crude futures rose $3.11, or 4.3 percent, to $75.83 a barrel by 0355 GMT, after falling $9.50 on Friday.
US West Texas Intermediate crude rose $3.47, or 5.1 percent, to $71.62 a barrel, after falling $10.24 in the previous session.
Oil prices fell more than 10% on Friday – their biggest one-day drop since April 2020 – as the new variable frightened investors across financial markets.
There are fears that the new alternative could derail the global economic recovery, potentially hurting oil demand, while also heightening fears that oversupply could swell in the first quarter.
“We saw some correction because the drop in oil prices on Friday was exaggerated,” Reuters quoted Tatsufumi Okoshi, chief economist at Nomura Securities, as saying.
“If the market declines further, OPEC + may halt the planned increase in crude production to support prices,” he said.
The Omicron variant spread around the world on Sunday, with new cases detected in the Netherlands, Denmark and Australia even as more countries imposed travel restrictions.
The World Health Organization (WHO) said it was not yet clear whether Omicron, which was first discovered in South Africa, was more transmissible or dangerous than the other variants.
The top US infectious disease official, Dr. Anthony Fauci, told President Joe Biden on Sunday that it would take about two weeks for definitive information on Omicron.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have postponed technical meetings to later this week, giving themselves more time to assess Omicron’s impact on oil demand and prices, according to OPEC+ sources and documents.
The OPEC Joint Ministerial Monitoring Committee was postponed from Tuesday to Thursday. OPEC+ will also meet on Thursday, when a policy decision is likely to be announced on whether to adjust its plan to increase production by 400,000 barrels per day in January and beyond.
Some analysts have suggested that the group may pause the increases following the release of stocks by oil consuming countries and the potential demand repercussions of new closures to contain the new alternative.
“All eyes will be on how Omicron will affect the global economy and fuel demand, the conduct of OPEC+ and the Iran nuclear talks this week,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Talks on reviving the 2015 Iran nuclear deal are set to resume in Vienna on Monday, as Iran’s nuclear progress raised doubts about the possibility of a breakthrough to bring Tehran and the United States back into full compliance with the deal.
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