Oil prices declined on Tuesday as investors embraced expectations that major oil producers will confirm a plan to add supply at a meeting on Tuesday amid diminishing concerns regarding the spread of the omicron variant of Covid-19.
Brent crude futures dropped 25 cents to $78.74 a barrel at 07:39 GMT. U.S. West Texas Intermediate (WTI) crude fell 19 cents to $75.89 a barrel. Both of them gained more than 1% on Monday.
Currently, the biggest driver of global oil prices is managing the market’s supply side by OPEC+. Virendra Chauhan from Energy Aspects also mentioned that fuel demand concerns from the spread of omicron are declining. The planned releases of crude from various national strategic petroleum reserves are smaller than expected.
Oil prices and OPEC+
The Organization of the Petroleum Exporting Countries (OPEC) and its allies are due to meet in several hours. Notably, the Joint Ministerial Monitoring Committee will meet at 12:00 GMT, followed by a ministerial meeting at 13:00 GMT. Major oil producers plan to conduct both meetings by video conference.
In February, it will likely stick to its plan to increase output by 400,000 barrels per day (BPD). Analysts from RBC Capital Markets said OPEC+ was unlikely to change course given the current price outlook, etc.
Despite the emergence of Covid’s new variant as well as its impact on international travel, economies such as Australia are sticking to their reopening plans. Besides, factory activity grew in Asia last month as companies took global cases of omicron in stride.
Still, analysts warned that OPEC+ might have to alter tack if tension over Ukraine flares up and hits fuel supplies.