Oil prices were largely steady on Tuesday as investors expected major producers to agree to stick to their planned output increase at their meeting later in the day amid diminishing concerns over the spread of the Omicron variant of COVID-19. Brent crude was up 22 cents, or 0.3 per cent, at $79.20 a barrel at 0939 GMT, while U.S. West Texas Intermediate (WTI) crude rose by 21 cents, or 0.3 per cent, to $76.29 a barrel.
OPEC+ is expected to increase oil output for February as the group assesses only a short-lived impact on demand from the Omicron. OPEC+, which groups producers from the Organization of the Petroleum Exporting Countries (OPEC) with others including Russia, has raised its output target each month since August by 400,000 barrels per day (bpd).
“Number one driver (of global oil prices) at the moment is the management of the supply side of the market by (producer alliance) OPEC+,” said Virendra Chauhan, an analyst from Energy Aspects.
In a technical report seen by Reuters on Sunday, OPEC+ played down the impact on oil demand from the Omicron variant.
“The impact … is expected to be mild and short-lived, as the world becomes better equipped to manage COVID-19 and its related challenges,” the Joint Technical Committee report said.
“This is in addition to a steady economic outlook in both the advanced and emerging economies,” it added.
While OPEC+ has increased its output target each month, actual production has not kept pace as some members struggle with capacity constraints. OPEC+ producers missed their targets by 730,000 bpd in October and by 650,000 bpd in November, the International Energy Agency said last month. Russia says OPEC+ prioritizes mid-term strategy over U.S. calls for more oil