© Reuters. File photo: General view showing Pemex’s Cadereyta refinery in Cadereyta, on the outskirts of Monterrey, Mexico, April 20, 2020. REUTERS/Daniel Becerril/File Photo
Scott Di Savino
New York (Reuters)-Crude oil prices rose slightly on Friday after the Organization of the Petroleum Exporting Countries (OPEC)+ stated that if the number of pandemic lockdowns keeps increasing to curb demand, it may review its policy to increase production in a short period of time .
As of 12:39 pm Eastern Time (1739 GMT), futures prices rose by 90 cents, or 1.3%, to US$70.57 per barrel, while US West Texas Intermediate (WTI) crude oil rose by 55 US cents, or 0.8%, to US$67.05 per barrel.
However, the sharp decline earlier this week caused the two benchmark indexes to fall for the sixth consecutive week for the first time since November 2018.
The Organization of Petroleum Exporting Countries, Russia and its allies, an organization known as OPEC+, surprised the market by sticking to its plan to increase the supply of 400,000 barrels per day (bpd) in January on Thursday.
“Its decision to continue increasing monthly crude oil production is a vote of confidence in the near-term demand outlook. Better said that OPEC+ hopes that the new Omicron variant will not have a lasting impact on oil demand,” PVM said in a report.
However, if demand is affected by measures to curb the spread of the Omicron coronavirus variant, OPEC+ will open the door for rapid policy changes. They said they could meet again before the next meeting on January 4.
“Brent crude oil has climbed to US$71 per barrel, which is about US$5 higher than yesterday’s daily low. So what is the explanation? OPEC+ said that if market conditions change, it may reconsider in a short period of time. Yesterday’s decision,” Commerzbank (DE:)’ s Carsten Fritsch said.
In addition, OPEC has been working hard to achieve its planned increase in production, and last month’s output was lower than planned.
Due to the emergence of the Omicron coronavirus variant and speculation that it may trigger a new lockdown and weaken fuel demand, the entire asset market is in turmoil.
“So far, we have not seen (a) signs of weakening global demand,” JPMorgan Chase (NYSE:) analysts said in a report.
The World Health Organization urges countries to vaccinate their people against the virus, saying that restricting travel is not the solution.
Switzerland announced stronger anti-COVID-19 measures as its government is working to contain the surge in infections and the arrival of Omicron variants in the country.
At the same time, the oil market does not seem to be disturbed by the much lower-than-expected increase in U.S. employment in November. This may be due to the fact that despite the company’s higher wages, the expiration of generous unemployment benefits, and the full reopening of schools Millions of unemployed Americans stay at home.
The market is also paying attention to Baker Hughes’ US drilling data at 1pm Eastern Time this week. The number of oil rigs as an indicator of future production increased for the fifth consecutive week last week. [RIG/U]
In addition, the global market should not expect more oil from Iran in the near future.
The indirect negotiations between the United States and Iran to save the 2015 Iran nuclear agreement faltered on Friday as they were suspended until next week, and European officials expressed disappointment at Iran’s new tough government demands.
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