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Oil prices deepen their losses to 3% after the OPEC + decision – Brent crude is below $67

  • 02 December, 2021
  • 5:56 pm EET

Oil prices deepened their losses by about 3%, during Thursday’s trading, as Brent crude fell below $ 67 a barrel, after the OPEC + alliance decided to stabilize the production policy.

The drop in prices comes amid fears that the Corona virus “Omicron” mutant will harm the demand for fuel, especially with many countries imposing strict measures to prevent the spread of Corona and its variants.

 

Oil Prices Today

Brent crude futures prices – for February 2022 delivery – fell by about 2.8%, recording $66.94 a barrel, after rising near the level of $71 earlier in the session.

The prices of West Texas Intermediate crude futures – January delivery – also fell by 3%, recording $63.59 a barrel, after hitting a level above $67 during trading.

Oil prices turned lower, at the end of trading on Wednesday, after strong gains during the session.

Global oil prices have lost more than $10 a barrel since last Thursday, when the news of the Omicron mutant shocked investors.

 

OPEC+ Decision

The OPEC+ alliance decided to stabilize the gradual increase in oil production of 400,000 barrels per day in January, indicating that there was no need to adjust the current policy, despite the emergence of the Omicron mutation and decisions to withdraw from the strategic oil reserve.

Since August, the alliance has started adding 400,000 barrels per day of production to global supply each month, to offset record cuts agreed in 2020.

However, the new mutant “Omicron” complicated the decision-making process; Some observers had expected that OPEC+ would pause the additions in January in an attempt to slow supply growth.

And “energy” sources confirmed that the OPEC + alliance is discussing 4 scenarios; The first is to agree to continue the gradual increase in production by 400,000 barrels per day.

As for the second scenario, the coalition decides to increase a partial increase of less than 400,000 barrels per day, or it reaches to stop this increase temporarily until market conditions improve, a third possibility.

While the fourth scenario refers to an agreement between OPEC countries on something, and if a reduction or an increase is required, Saudi Arabia may do so as it did in the past when it volunteered additional cuts, according to the sources.

 

Mutant Omicron

Concerns about the impact of the omicron mutated rose after the first case was reported in the US, and the Bank of Japan warned of economic pain; As countries respond with stricter containment measures.

US Deputy Energy Secretary David Turk said the administration of President Joe Biden could adjust the timing of its planned launch of the Strategic Petroleum Reserve if global energy prices fell significantly.

 

US Stocks

Gains in oil markets were capped today, Thursday, after weekly US inventory data showed US oil inventories fell less than expected last week; Gasoline and distillate inventories rose much more than expected as demand weakened.

The Energy Information Administration said crude stocks fell by 910,000 barrels in the week to November 26, compared to analysts’ expectations in a Reuters poll for a 1.2 million barrel decline.

 

SOURCE : REUTERS

 

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