LONDON: Oil rose for a second day on Friday after OPEC+ said it would meet again to review output if the omicron COVID-19 variant impacts demand.
Prices were still headed for a sixth week of declines on concern a steady increase in supply from the Organization for Petroleum Exporting Countries and its allies including Russia would lead to a surplus in the coming months.
Brent crude was 2.8 percent higher at $71.62 as of 11:57 a.m. Riyadh time following a 1.2 percent gain on Thursday. WTI, the US benchmark, also gained 2.8 percent, to $68.32 after adding 1.4 percent yesterday.
While the market was surprised by the OPEC+ decision on Thursday to go ahead with its plan to add 400,000 barrels a day of supply in January, the group said it would meet again before its next scheduled meeting on Jan. 4 to reconsider its plans if deemed necessary.
The decision came following weeks of calls by US President Joe Biden for more oil to ease pump prices, which had been resisted by OPEC. US officials have been in the Gulf for talks this week, the results of which have been a game-changer that goes beyond oil policy, a person familiar with the meetings told Bloomberg News, although no details of any agreement gave emerged.
“We appreciate the close coordination over the recent weeks with our partners Saudi Arabia, the UAE, and other OPEC+ producers to help address price pressures,” White House spokeswoman Jen Psaki said after the OPEC+ output decision. “Together with our recent coordinated release from the SPR, we believe this should help facilitate the global economic recovery.”
Traders are "reluctant to bet against the group eventually pausing its production increases,” analysts from ANZ Research wrote in a research note.
Still, Brent was headed for a 2.6 percent weekly decline, while WTI was set to close 1 percent lower in the week, both on a six-week losing streak.
The market has been focused on the potential impact of omicron on the global economy and oil demand if countries impose new lockdowns.
President Joe Biden has unveiled stricter Covid-19 travel rules as the US confirmed a handful of cases of the omicron variant. The UK tightened mask-wearing rules this week and advised at-risk groups not to travel, while South Korea announced on Friday that people visiting restaurants and cinemas and other public spaces will have to show vaccine passes.
The omicron coronavirus variant threatens to fuel soaring inflation in the United States by further pressuring supply chains and worsening worker shortages, Cleveland Federal Reserve Bank President Loretta Mester told the Financial Times.
However, Asian stocks rose on signs the omicron variant could be less severe than the previous dominant strain, delta.
Scientists in South Africa, where the mutation was first discovered last month, said symptoms for vaccinated infected patients appeared to be mild, while a handful of US omicron cases identified also displayed moderate symptoms.
India’s health ministry said on Friday the severity of the COVID-19 disease from the omicron variant in the country could be low because of vaccination and high exposure to the Delta variant.
“Given the fast pace of vaccination in India and high exposure to delta variant as evidenced by high seropositivity, the severity of the disease is anticipated to be low,” it said in a statement. “However, scientific evidence is still evolving.”