Despite growing concerns about energy demand due to the emergence of the Omicron variant of the coronavirus, a group of major oil producers will roll over existing production policies to increase production early next year. After the decision, crude oil futures reduced much of the loss on Thursday.
On Thursday, OPEC and its allies (known as OPEC +) decided to roll over current policies and increase total monthly production by 400,000 barrels per day in January.
Fawad Razaqzada, a market analyst at ThinkMarkets, said in a market update: “Demand concerns are already rising and the last thing Crude Oil Bull expected to hear was the current policy from OPEC + Group. It was another rollover. ” “Still, that’s exactly what happened, contrary to the expectation that the January hike was moderate or no hike at all.”
Therefore, OPEC + “adds more oil to the world’s supply and completely eliminates the threat of supply shortages when demand is expected to decline,” Razakzada said.
However, in the news release, OPEC + said the meeting remained in a session “waiting for further developments in the pandemic, keeping a close eye on the market and making immediate adjustments as needed.”
Rebecca Babin, senior energy trader at CIBC Private Wealth US, said in an email comment that oil prices are currently recovering from session lows.
“Despite a 20% drop in prices, OPEC + has basically eliminated political pressure from the United States and other consuming countries by increasing production,” she said. ..
“Second, OPEC + has no obligation to actually provide these increases in production,” Babin said. For the past six months, “OPEC + has not yet met its announced growth targets and has kept the market very tight.”
West Texas Intermediate Crude Oil Delivered in January
After trading at a low of $ 62.43 on the New York Trading Exchange, it fell 29 cents (0.4%) to $ 65.28 a barrel.
WTI, the US oil benchmark, fell more than 4% this week due to persistent concerns about oil uptake and OPEC +’s short-term strategy. November recorded the largest monthly decline in WTI last month — a 21% decline.
Meanwhile, February Brent crude oil
The global benchmark was $ 68.48 a barrel, down 39 cents (0.6%) at ICE Futures Europe after a 0.5% drop a day ago and a 5.5% drop on Tuesday.
There is fear that new restrictions imposed by the state to fight new strains of coronavirus may undermine the desire for energy products.
“The new Omicron variant of COVID-19 will bring daily demand of 2.9 million barrels (bpd) to the global oil market in the first quarter of 2022, with an expected aggregate demand of 98.6 million barrels / day to 95.7 million. May be reduced barrels / day. According to Rystad Energy’s estimates released in Thursday’s report, it causes more blockages or restrictions.
“If the variants spread rapidly, causing an increase in COVID cases and a reintroduction of the blockade, Rystad Energy said oil demand was expected to rise from 99.1 million barrels / day to 97.8 million barrels / day in December 2021 alone. We predict that it may decrease. This is a decrease of 1.3 million barrels / day. ”Rystad project.
Gasoline on Nymex Thursday in January
Work on kerosene in January from 0.2% to $ 1.955 a gallon
It rose 0.6% to $ 2.089 a gallon.
Natural gas futures rose ahead of the Energy Information Agency’s weekly report on US commodity supply. Analysts surveyed by S & P Globalplatz predict that the EIA will report a reduction of 59 billion cubic feet compared to an average reduction of 31 billion cubic feet over a five-year period.
January natural gas
British thermal unit up 0.4% per million to $ 4.273.
Oil futures reduce losses as OPEC + agrees to roll over existing policies to increase production in January
http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-77BA-F03B51FD1DBC%7D&siteid=rss&rss=1 Oil futures reduce losses as OPEC + agrees to roll over existing policies to increase production in January