Oil Prices Rise as OPEC+ Strategize Over Covid-19 Variant Fears

On Thursday, the 2^nd December oil prices rose as market investors modifies their strategies ahead of the much anticipated OPEC+ meeting where the cartels supply policy will be discussed. The OPEC+ meeting was instigated by fears of demand shortfall because of the Omicron Covid-19 variant.

Brent Crude futures rose by 1.2%, to $69.72 at 04:02 GMT, U.S. West Texas Intermediate (WTI) crude futures gained 1.3%, to $66.42 a barrel.

Senior economist at NLI Research Institute Tsuyoshi Ueno stated, “Investors unwound their positions ahead of the OPEC+ decision as oil prices have declined so fast and so much over the past week,”

Ueno further explained, “The Market will be watching closely the producer group’s decision as well as comments from some of the key members after the meeting to suggest their future policy,”

On Thursday, Organization of the Petroleum Exporting Countries and its allies will conclude on their supply strategy, whether to increase oil supply into the market.

OPEC+ has consistently added 400,000 barrels per day to global supply chain. However, the Omicron variant has created a perplexing situation, with market analysts theorizing that OPEC+ could pause those additions in January in an attempt to slow supply growth.

An analyst at Fujitomi Securities Co Ltd said  “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,”

The Japanese government has warned the global market of the economic impact, which could arise from the Omicron variant, With the United States also reporting its first case of the variant.

David Turk, the U.S Deputy Energy Secretary, has revealed that the planned release of strategic crude oil stockpiles might be put on halt if oil prices drop significantly. U.S crude stock fell last week as inventory data suggests that gains in the oil market occurred on Thursday.