Oil prices rose more than 2% on Wednesday, recouping some of the steep losses from the previous session, as major producers prepared to discuss how to respond to the threat of a hit to fuel demand from the Omicron variant.
Brent crude futures rose $1.90, or 2.7%, to $71.13 a barrel at 0504 GMT, after a 3.9% slump on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures rose $1.71, or 2.6%, to $67.89 a barrel, after a 5.4% drop on Tuesday.
The Organization of the Petroleum Exporting Countries (OPEC) will meet on Wednesday after 1300 GMT and ahead of a meeting on Thursday of OPEC+, which groups OPEC with allies including Russia.
While some analysts expect OPEC+ to pause plans to add 400,000 barrels per day of supply in January in light of the potential hit to demand from travel curbs to rein in the spread of the Omicron variant, several OPEC+ ministers have said there was no need to change course.
“Since (the) U.S. and other countries agreed on releasing emergency stocks to control the price rise… also since the prices have already corrected from $85 a barrel to close to $70, OPEC+ may revisit their strategy,” said Sunil Katke, head of commodities retail business at Kotak Securities.
“There is a possibility of that happening, considering the new coronavirus variant and its impact on global demand, especially in the aviation sector.”
— John Kemp (@JKempEnergy) November 30, 2021
Even if OPEC+ agrees to go ahead with its planned supply increase in January, producers may struggle to add that much.
A Reuters survey found OPEC pumped 27.74 million bpd in November, up 220,000 bpd from the previous month, but that was below the 254,000 bpd increase allowed for OPEC members under the OPEC+ agreement.
In a sign of bearish demand, data from the American Petroleum Institute industry group showed U.S. crude stocks fell by 747,000 barrels in the week ended Nov. 26, according to market sources, which was a smaller decline than expected.
Ten analysts polled by Reuters were expecting crude stockpiles to fall by about 1.2 million barrels.