Oil prices gave up earlier gains on Tuesday as investors embraced expectations that major oil producers would confirm a plan to add supply later on Tuesday, as concerns about the spread of the Omicron variant of COVID-19 faded.
Brent crude futures fell 25 cents to $78.74 a barrel at 0739 GMT, while WTI crude inched down 19 cents to $75.89 a barrel in the United States.
On Monday, the benchmark contracts both gained more than 1%.
The management of the supply side of the market by (producer alliance) OPEC+ is the number one driver (of global oil prices) at the moment.
According to Chauhan, the spread of Omicron has reduced fuel demand concerns and planned crude releases from various national strategic petroleum reserves are smaller than expected.
The Organization of Petroleum Exporting Countries (OPEC), Russia, and their allies, known as OPEC+, meet on Tuesday. The Joint Ministerial Monitoring Committee will meet via video conference at 1200 GMT, followed by a ministerial meeting at 1300 GMT.
According to three OPEC+ sources, the group will likely stick to its plan to increase output by 400,000 barrels per day in February, as it has done every month since August. According to RBC Capital Markets analysts, OPEC+ is unlikely to change course given the current price outlook, pressure from US President Joe Biden’s administration to increase supply, and no significant new COVID-19 mobility curbs.
Though Omicron (COVID-19 variant) cases continue to rise in critical geographies, the lack of widespread lockdown restrictions will likely keep near-term demand concerns at bay.
Despite the emergence of Omicron and its potential impact on international travel, economies such as Australia remain committed to reopening.
Last month, factory activity increased in Asia as companies dealing with global cases of Omicron. Analysts warned, however, that OPEC+ may have to change course if tensions between the West and Russia over Ukraine flare-up and disrupt fuel supplies, or if Iran’s nuclear talks with major powers progress, resulting in the lifting of oil sanctions against Iran.
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