SINGAPORE – Oil prices climbed on Friday, extending gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron variant dents demand, but prices were still on course for a sixth week of declines.
Brent crude futures rose $1.34 cents, or 1.9%, to $71.01 a barrel by 0752 GMT, after climbing 1.2% in the previous session.
U.S. West Texas Intermediate (WTI) crude futures rose $1.38, or 2.1%, to $67.88 a barrel, adding to a 1.4% gain on Thursday.
The Organization of the Petroleum Exporting Countries, Russia and allies, together called OPEC+, surprised the market on Thursday when it stuck to plans to add 400,000 barrels per day (bpd) supply in January.
“Unless we get a major Omicron escalation…this week’s lows for Brent and WTI likely represent the lows for the medium-term,” Jeffrey Halley, senior analyst at OANDA said.
However, the producers left the door open to changing policy swiftly if demand suffered from measures to contain the spread of the Omicron coronavirus variant. They said they could meet again before their next scheduled meeting on Jan. 4, if needed.
That boosted prices with “traders reluctant to bet against the group eventually pausing its production increases,” ANZ Research analysts said in a note.
Wood Mackenzie analyst Ann-Louise Hittle said it made sense for OPEC+ to stick with their policy for now, given it was still unclear how mild or severe Omicron turns out to be compared with previous variants.
“The group’s members are in regular contact and are monitoring the market situation closely,” Hittle said in emailed comments.
“As a result, they can react swiftly when we start to get a better sense of the scale of the impact the Omicron variant of COVID-19 could have on the global economy and demand.”
The market has been roiled all week by the emergence of Omicron and speculation that it could spark new lockdowns, dent fuel demand and spur OPEC+ to put its output increases on hold.
For the week, Brent was poised to end down about 2.4%, while WTI was on track for a 0.4% drop, with both heading lower for a sixth straight week for the first time since November 2018.
JPMorgan analysts said the market fall implied an “excessive” hit to demand, while global mobility data, excluding China, showed that mobility is continuing to recover, averaging at 93% of 2019 levels last week.
“So far we see no signs of demand weakening on (a) global scale,” JPMorgan commodities analysts said in a note.