Crude-oil futures were switching between gains and losses Thursday morning, as investors awaited an policy update from major oil producers and wrestled with concerns about the impact to supplies and demand resulting from the emergence of the omicron variant of coronavirus that causes COVID-19.
West Texas Intermediate crude for January delivery
CLF22,
CL00,
was up 6 cents, or 0.1%, at $65.68 a barrel on the New York Mercantile Exchange after declining 0.9% on Wednesday.
WTI, the U.S. oil benchmark, was down nearly 4% for the week as persistent concerns about crude uptake and the near-term strategy of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, have undercut values.
OPEC+ are scheduled to decide later Thursday on a plan to adhere to an earlier plan to release additional oil into the market as had been previously planned.
Reuters reported that members of OPEC+ didn’t yet have a unified strategy in place, with some producers considering a pause to a planned January increase, while others advocating for the previously agreed upon increase of 400,000 barrels a day to continue and select view promoting a reduction in output as a result of the steady downtrend in oil values.
Indeed, November marked the biggest monthly declines for front-month WTI — down 21%.
Meanwhile, February Brent crude
BRNG22,
BRN00,
the global benchmark, was down 6 cents, or 0.1%, at $68.77 a barrel on ICE Futures Europe, following a 0.5% decline a day ago and a 5.5% tumble on Tuesday.
Fears are that fresh restrictions imposed by countries to combat the new strain of coronavirus will hurt appetite for energy products.
“The new omicron variant of Covid-19 could cost the global oil market as much as 2.9 million barrels per day (bpd) of demand in the first quarter of 2022, bringing total expected demand down from 98.6 million bpd to 95.7 million bpd, if it triggers more lockdowns or restrictions,” according to estimates from Rystad Energy, released in a report on Thursday.
“If the variant spreads rapidly, causing a rise in Covid cases and the reintroduction of lockdowns, Rystad Energy predicts that oil demand could fall from an expected 99.1 million bpd to 97.8 million bpd in December 2021 alone – a drop of 1.3 million bpd,” Rystad projects.
Meanwhile, OPEC held technical a meeting on Wednesday and was scheduled to hold another on Thursday, just ahead of the OPEC and non-OPEC ministerial meeting, which is also set for Thursday.
The Energy Information Administration reported on Wednesday that U.S. crude inventories fell by 900,000 barrels for the week ended Nov. 26.
On average, analysts had forecast a 2.7 million-barrel decline, according to a poll conducted by S&P Global Platts. The American Petroleum Institute on Tuesday reported a 747,000-barrel decrease, according to sources.
The EIA also reported weekly inventory increases of 4 million barrels for gasoline and 2.2 million barrels for distillates. The S&P Global Platts survey expected supply climbs of 900,000 barrels gasoline and 1 million barrels for distillates.
This post was originally published on Market Watch
