The market has been roiled all week with the emergence of Omicron and speculation that it could trigger new lockdowns, reduce fuel demand and put OPEC+ production increases on hold.
Oil prices rallied on Friday and boosted gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron variant dampens demand, but prices are still on track for a sixth-week decline.
Brent crude futures rose 1.19 cents, or 1.7%, to $70.86 a barrel as of 0453 GMT, after gaining 1.2% in the previous session.
West Texas Intermediate (WTI) crude futures rose $1.19, or 1.8%, to $67.69 a barrel, after gaining 1.4% on Thursday.
Brent is set to close the week down nearly 2.6%, while WTI is down less than 1%, both on the way down for the sixth week in a row.
The market was surprised when the Organization of the Petroleum Exporting Countries, Russia, and its allies approved on Thursday to add a supply of 400,000 barrels per day (bpd) in January. The group said they could meet again if needed in an emergency before their next meeting on January 4th.
In this case, the door was left open and prices rose if the measures taken to contain the spread of the Omicron coronavirus variant continued to increase demand.
Global mobility data excluding China showed that activity continues to improve, taking an average of 93% from 2019 levels last week. So far, there has been no significant sign of weakening global demand.
However, traders’ reluctance to gamble on the group’s unpredictable decisions is limiting production increases.
Given that it’s still unclear how mild or severe the Omicron is compared to previous variants, it seems reasonable for OPEC+ to stick with its policies for now.
Group members doing their job well, keep in regular contact and closely monitor the market situation. Thus, rapid response can be made when we better understand the scale of the impact of the COVID-19 Omicron variant on the global economy and demand.
