Oil prices rise as Opec+ meets to decide on supply

London — Oil prices rose on Thursday as investors adjusted positions before an Opec+ decision on supply policy, though gains were capped by fears that the Omicron coronavirus variant could hit fuel demand.

Brent crude futures rose 35c, or 0.5%, to $69.22 a barrel by 12.15pm GMT while US West Texas Intermediate futures gained 29c, or 0.4%, to $65.86.

Global oil prices have declined more than $10 a barrel since last Thursday, when news of Omicron first shook investors.

Opec and its allies, collectively known as Opec+, are likely to decide on Thursday whether to release more oil into the market, as previously planned, or to restrain supply.

The meeting is scheduled to start at 1pm GMT. Since August, the Opec+ has been adding a further 400,000 to global supply each month, gradually winding down record cuts agreed in 2020. The new coronavirus variant, however, has complicated Thursday’s decision.

Opec+ sources and others had differing views on the likely outcome. Some say the planned January increase will be paused, others expect the previously agreed 400,000bb/day increase will go ahead, and one even expected a cut in production.

Jeffrey Halley, senior market analyst at Oanda, believes that the collapse in oil prices and uncertainties surrounding Omicron will prompt Opec+ to call a temporary halt to production increases.

“That may restore a modicum of stability to oil markets,” he said.

US 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 prices on Thursday were also capped by weekly US inventory data, which showed the country’s crude stocks fell less than expected last week. Petroleum and distillate inventories rose much more than expected while demand weakened.

Reuters