Brent climbs near $70 as Omicron worries ease, eyes on OPEC
03:21, 2 December 2021
Oil prices rose with Brent crude rates climbing to near $70 as the comments of the World Health Organisation (WHO) on Omicron soothed markets as well as expectations that the Organisation of Petroleum Exporting Countries (OPEC) will pause output increase in today’s meeting.
International benchmark Brent crude oil futures gained 0.42% to $69.14 per barrel on Thursday. US crude futures West Texas Intermediate rose 0.56% to $65.94/bbl. But Brent price is nearly 20% lower than a three-year high of $86/bbl in October.
The market’s concerns about the Omicron variant eased after the WHO said that vaccines will probably protect against severe cases, analysts at ANZ Research said in a note on Thursday.
OPEC output halt
“However, authorities continue to impose restrictions on travel in a bid to slow its spread across the globe. Growing expectations of a halt to supply increase from OPEC also boosted sentiment,” the analysts said.
The Saudi Arabia-led Organisation of Petroleum Exporting Countries and its allies or OPEC+ is meeting in Vienna yesterday and today to discuss whether to keep 400,000 barrels per day increase for January. Markets are expecting the alliance will halt output increase after the US and several key oil-consuming nations announced a concerted release of their strategic petroleum reserves (SPR) to tame high energy prices.
Lukman Leong, an analyst at Jakarta-based Deu Calion Futures said that the Covid-19 threat on oil demand has not yet diminished and any policy on supply may only give short-term relief.
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Covid-19 threat
“If it’s only a supply issue, such as the release of SPR, OPEC can handle it. But Covid-19 and lockdowns are beyond anyone’s control. It (Covid-19) can be long-term. It will put pressure on oil prices,” Lukman said.
“An output increase halt may support oil prices for the short-term, but it will not have much impact if demand eases because Omicron spark widespread lockdown,” he added.
OPEC in its monthly oil market report for November, released on Thursday, revised down its world’s oil demand growth in 2021 by 0.16 million barrels per day (bpd) compared with October’s assessment to stand at 5.7 million bpd. Global oil demand for this year is now estimated to reach 96.4 million bpd.
Read more: OPEC+ hinting at not releasing additional oil supplies
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