Prices were up more than 3% on the day, as major producers prepared to discuss how to deal with the threat to fuel demand due to the mutant Omicron.
An internal report seen by Reuters indicated that the OPEC + bloc expects to increase the oil surplus to two million barrels per day in January, 3.4 million barrels per day in February and 3.8 million barrels per day in March 2022.
“Overall, it appears that Omicron’s current impact will be on jet fuel, particularly in Africa and Europe,” the report said. “Demand for transportation fuels in Europe may also be affected,” he added.
The report confirmed: OPEC + says that the impact of Omicron on oil demand has not yet appeared, as the susceptibility to infection and the severity of symptoms are not yet clear.
“Since the United States and other countries have agreed to use emergency stocks to control price hikes… Also since prices have already fallen from $85 a barrel to nearly $70, they have been given the opportunity to re-enter the market,” said Sunil Katke, head of retail merchandise affairs at Cuttack Securities. “OPEC + is reconsidering its strategy.” He added, “There is a possibility that this will happen, given the new Corona virus and its impact on global demand, especially in the aviation sector.”
Even if OPEC+ agrees to go ahead with the planned supply increase in January, producers may find it difficult to add that much.
A Reuters survey found that OPEC pumped 27.74 million barrels per day in November, an increase of 220,000 barrels per day from the previous month, but that was less than the increase of 254,000 barrels per day allowed for OPEC members under the OPEC + agreement.
In November, Brent fell 16.4 percent, while WTI fell 20.8 percent, the largest monthly drop since March 2020. “The threat to oil demand is real,” said Louise Dixon, senior oil market analyst at Rystad Energy. .. Another wave of closure measures may cause a loss of up to three million barrels per day in oil demand during the first quarter of 2022.”
Also weighing on prices, Federal Reserve Chairman Jerome Powell said the US central bank would likely discuss accelerating its reduction in bond purchases amid strength in the economy and expectations that high inflation will continue.
And OPEC + meets Thursday, after the meeting of the Organization of Petroleum Exporting Countries (OPEC), on Wednesday.
A number of OPEC + ministers, including Russia and Saudi Arabia, say there is no need for the group to take a knee-jerk reaction.
But some analysts have indicated that OPEC + may suspend plans to add 400,000 barrels per day to supplies in January. The group was already studying the effects of the United States and other countries’ announcement last week to use emergency crude reserves to cool energy prices. OPEC + is gradually ending the record supply cuts of ten million barrels per day, which it adopted last year, and there are still cuts of about 3.8 million barrels per day in effect. (Reuters)
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