Oil recoups losses from Friday, focusing on Omicron spread, Iran talks
Oil prices rose on Monday, recouping some losses
after Friday's plunge of about US$10 a barrel, as investors looked for bargains
but remained cautious with the focus on the Omicron coronavirus variant and
Iran nuclear deal negotiations.
Brent crude futures climbed US$3.05, or 4.2per cent, to
US$75.77 a barrel by 0014 GMT, after falling US$9.50 on Friday.
U.S. West Texas Intermediate (WTI) crude was up US$3.27, or
4.8per cent, at US$71.42 a barrel, having tumbled US$10.24 in the previous
session.
Oil prices crashed together with other financial markets on
Friday by more than 10per cent, their largest one-day drop since April 2020, as
the new variant spooked investors and added to concerns that a supply surplus
could swell in the first quarter.
"There was correction buying on views that the oil
market had been oversold last week and on speculations that OPEC+ may take a
measure against the Omicron, potentially cutting output," said Hiroyuki
Kikukawa, general manager of research at Nissan Securities.
"All eyes will be on how the Omicron will affect global
economy and fuel demand, OPEC+ action and Iran nuclear talks this week,"
he said.
The Omicron coronavirus variant spread around the world on
Sunday, with new cases found 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, first detected in Southern Africa, is more transmissible
or dangerous than other variants.
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 the impact of the Omicron variant on oil demand
and prices, according to OPEC+ sources and documents.
OPEC+ will meet on Thursday instead of Tuesday, when a
policy decision will likely be announced on whether to adjust its plan to
increase output by 400,000 barrels per day in January and beyond.
OPEC+ has been releasing 400,000 barrels per day of oil per
month while winding down its record cuts from last year.
Some analysts have suggested the group could pause increases
after the release of stocks by oil consuming countries and possible
repercussions for demand from new lockdowns to contain the new variant.
Meanwhile, talks on reviving the 2015 Iran nuclear deal are
to resume in Vienna on Monday, with Iran's atomic advances raising doubt as to
whether a breakthrough can be made to bring Tehran and the United States back
into full compliance with the accord.
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