Oil prices extended their gains to about 1% during trading today, Wednesday, with Brent crude rising near $ 81, ahead of the release of official data on US crude stocks.
Crude’s gains come, supported by the decisions of the OPEC + alliance, which eased the fears and pressures of the Omicron axis in oil demand.
And the OPEC + decision to continue to gradually increase production by 400,000 barrels per day, in the month of February, reflected the fading of concern about a large surplus in the first quarter, as well as the desire to provide consistent guidance to the market.
Oil prices today
Brent crude futures prices – for March 2022 delivery – rose by about 1%, recording $80.77 a barrel.
The price of West Texas Intermediate crude futures – February delivery – also rose 0.9%, recording $77.67 a barrel.
Corona and US stocks
The increase in oil prices came despite the huge rise in coronavirus cases caused by the omicron mutant, as the report of the OPEC + Joint Technical Committee indicated that the effect of the omicron mutant will be “mild and short-lived… as the world becomes better equipped to deal with Covid-19 and the challenges associated with it.” with it”.
And the United States announced nearly one million new infections with the Corona virus the day before yesterday, Monday, the highest daily toll of any country in the world, and almost double the previous highest level in the United States recorded a week ago.
For its part, the American Petroleum Institute announced late on Tuesday that US gasoline stocks rose by 7.1 million barrels in the week ending December 31, and distillate stocks rose by 4.4 million barrels in the week.
Rising inventories, which exceeded analyst expectations, undermined bullish expectations from investors in the previous session when prices rose more than 1%, as market participants took the decision by major producers to add supply next month, a sign of confidence that spikes in coronavirus cases will not hurt demand for long. long.
“Last period of time there has been an increase in oil production in the US, as more producers are finding it profitable to return to rigs, which is affecting oil prices,” said Suganda Sachdeva, Vice President of Commodity Research at Religar Brookings.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies from abroad, led by Russia, in the OPEC+ alliance, agreed on Tuesday to add another 400,000 barrels of supply per day in February, as they have done every month since August.
The decision to stick with increased production reflects the group’s view that the Omicron mutator will have only a short-term impact on global energy demand.
“For two consecutive days of strong gains, crude oil has been put into overbought territory,” said Vanda Insights, oil market analysis provider, Vandana Hari.
On the one hand, there may be increasing hopes that the omicron mutant may herald the transformation of corona from a pandemic to an easily controllable disease, at least in highly-vaccinated parts of the world.
But on the other hand, prices may be affected by the realistic realization that countries are still on high alert, and that governments are not ready to ease restrictions as long as infections are rising.