Picture: 123RF/LNPDM
Picture: 123RF/LNPDM

Tokyo — Oil prices rose on Thursday, recouping the previous day’s losses, as investors adjusted positions ahead of an Opec+ decision over supply policy, but gains were capped amid fears the Omicron coronavirus variant will hurt fuel demand.

Brent crude futures rose 85 US cents, or 1.2%, to $69.72 by 4.02am GMT, having eased 0.5% in the previous session.

US West Texas Intermediate (WTI) crude futures gained 85 US cents, or 1.3%, to $66.42 a barrel, after a 0.9% drop on Wednesday.

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

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

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

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

Since August, the group has been adding 400,000 barrels per day (bpd) of output to global supply each month, as it gradually winds down record cuts agreed in 2020.

The new variant, though, has complicated the decision-making process, with some observers speculating Opec+ could pause those additions in January in an attempt to slow supply growth.

“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,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

Fears over the effect of the Omicron variant rose after the first case was reported in the US, and Japan’s central bank has warned of economic pain as countries respond with tighter containment measures.

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 markets on Thursday were capped as the US weekly inventory data showed US crude stocks fell less than expected last week, while petrol and distillate inventories rose much more than expected as demand weakened.

Crude inventories fell by 910,000 barrels in the week to November 26, the Energy Information Administration said, compared with analyst expectations in a Reuters poll for a drop of 1.2-million barrels.

Reuters

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