Oil rises on views OPEC+ may pause supply addition amid Omicron fears
TOKYO : Oil prices rose on Thursday, reversing the previous
day's losses, on expectations OPEC+ may pause supply additions amid growing
concern the spread of the Omicron coronavirus variant could weigh on the global
economy and fuel demand.
U.S. West Texas Intermediate (WTI) crude futures gained 48
cents, or 0.7per cent, to US$66.05 a barrel by 0140 GMT, after a 0.9per cent
drop on Wednesday.
Brent crude futures were up 48 cents, or 0.7per cent, at
US$69.35, having eased 0.5per cent in the previous session.
"Oil prices climbed as some investors anticipate that
OPEC+ will decide to maintain the current supply levels in January to cushion
any damage on demand from the Omicron spread," said Toshitaka Tazawa, an
analyst at Fujitomi Securities Co Ltd.
The Organization of the Petroleum Exporting Countries and
its allies, together known as OPEC+, will likely decide on Thursday whether to
release more oil into the market as previously planned or restrain supply.
Since August, the group has been adding an additional
400,000 barrels per day (bpd) of output to global supply each month, as it
gradually winds down record cuts agreed in 2020.
The new variant, though, has complicated the decision-making
process, with some observers speculating OPEC+ could pause those additions in
January in an attempt to slow supply growth.
Omicron is rapidly becoming the dominant coronavirus variant
in South Africa less than four weeks after it was first detected there. On
Wednesday, the United States became the latest country to identify an Omicron
case within its borders.
Global oil prices have lost more than US$10 a barrel since
last Thursday when news of Omicron shook investors.
U.S. Deputy Energy Secretary David Turk said President Joe
Biden's administration could adjust the timing of its planned release of
strategic crude oil stockpiles if global energy prices drop substantially.
Gains in oil markets on Thursday were capped as the U.S.
weekly inventory data showed U.S. crude stocks fell less than expected last
week, while gasoline and distillate inventories rose much more than expected as
demand weakened. [EIA/S]
Crude inventories fell by 910,000 barrels in the week to
Nov. 26, the Energy Information Administration (EIA) said, compared with
analyst expectations in a Reuters poll for a drop of 1.2 million barrels.
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