Oil prices rise on bets OPEC + will delay production surge By Reuters

© Reuters. FILE PHOTO: Pipelines move into Enbridge Inc. crude oil storage tanks at their tank farm in Cushing, Oklahoma March 24, 2016. REUTERS / Nick Oxford

By Sonali Paul

MELBOURNE (Reuters) – Oil prices soared on Tuesday, extending a rebound from last week’s drop on rising expectations by major producers to suspend plans to add crude in January amid uncertainty about the severity of the Omicron coronavirus variant.

US West Texas Intermediate (WTI) crude futures jumped 99 cents, or 1.4%, to $ 70.94 a barrel at 1:05 a.m. GMT, adding to a 2.6% rise on Monday.

Futures rose 82 cents, or 1.1%, to $ 74.26 a barrel, after gaining 1% on Monday.

Oil plunged about 12% on Friday along with other markets, fearing the heavily mutated Omicron could trigger further lockdowns and dent global growth.

The World Health Organization said on Monday that Omicron was at a very high risk of outbreaks of infection and several countries have stepped up travel restrictions. It is still unclear how serious the new variant is and whether it can withstand existing vaccines.

With the demand outlook clouded over, the Organization of the Petroleum Exporting Countries, Russia and their allies, together called OPEC +, which are due to meet on December 2, are increasingly expected to suspend their plans to add 400,000 barrels per day (bpd) of supply in January.

“We believe the group will look to pause production increases in light of the Omicron variant and the release of oil stocks by major oil consumers,” the Commonwealth Bank commodities analyst said, Vivek Dhar, in a note.

Pressure was already mounting within OPEC + to reconsider its supply plan after the release last week of emergency crude reserves by the United States and other major oil-consuming countries to deal with the surge. prices.

“After the releases of global strategic reserves and the announcement of dozens of countries restricting travel to and from South Africa and neighboring countries, OPEC and its allies can easily justify a production halt or even a slight reduction in production, ”said Edward Moya, analyst at OANDA. a note.

The prospect of an upturn in Iran’s oil exports also hangs over the market, following upbeat comments from diplomats as talks resumed Monday between world powers and Iran over relaunching a nuclear pact. .

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