OPEC and its allies agreed to a scheduled increase in production for next month, and an industry report pointed to another decline in U.S. crude inventories.
Futures in London traded near $80 a barrel. OPEC+ on Tuesday stuck to its plan to add 400,000 barrels a day for February after it cut estimates for a surplus in the first quarter. The American Petroleum Institute reported U.S. stockpiles fell by 6.43 million barrels last week, according to people familiar with the data. Official government figures are due Wednesday.
Oil finished 2021 on a strong footing as a string of global supply outages boosted sentiment. Consultant Facts Global Energy said the disruption – which in recent weeks has included Ecuador, Libya and Nigeria – totalled close to 1 million barrels a day.
Though concerns about the hit to demand from the omicron virus variant have eased and major economies continue to rebound from the pandemic, there’s still some uncertainty in Asia. Hong Kong announced tighter curbs on Wednesday. Earlier this week, the small Chinese city of Yuzhou went into lockdown after a few virus cases, while Xi’an has seen prolonged restrictions after a flare-up.
While oil is trading near $80, “the market is clearly concentrating on the price supportive news,” said Barbara Lambrecht, an energy analyst at Commerzbank AG. “Whether the optimism will suffice to ignore the looming supply surplus in any lasting fashion will presumably depend chiefly on the omicron wave.”
- West Texas Intermediate slipped 0.1 per cent to $76.93 a barrel by 10:03 a.m. in London
- Brent for March settlement was steady at $79.99 a barrel
The actual volume that OPEC+ adds to the market in February could be less than planned, due to some members struggling to hit production targets. Energy Aspects Ltd. co-founder Amrita Sen predicts the alliance will increase output by 250,000 barrels a day next month.
Meanwhile, there has been unrest in Kazakhstan, a member of the alliance. The nation’s president accepted the government’s resignation on Wednesday, after increases in fuel prices led to clashes between protesters and the police.
© 2022 Bloomberg L.P.