Oil prices were little changed, giving up most of their gains in volatile trading, as OPEC+ stuck to its policy of incrementally boosting output and the market considered the severity of the Omicron coronavirus variant.
Brent crude futures were 29 cents, or 0.4 per cent, higher at $69.19 a barrel by 1:38 p.m. ET (1839 GMT) while U.S. West Texas Intermediate (WTI) crude futures rose 35 cents, or 0.5 per cent, to $65.93.
U.S. front month contract traded volumes remained low, at about 267,000 – below the 200-day moving average and far lower than the last four days.
The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, decided on Thursday to release more oil into the market in January in line with previous months.
“They (OPEC) thought it might do more damage than good, to pause on production increases and that it might send a signal to the market that the demand destruction priced in was real,” said Phil Flynn, senior analyst at Price Futures Group.
“I think the OPEC decision is sending a signal of confidence that they believe the price action recently has been overdone,” he said.
Since August, the group has been adding an additional 400,000 barrels per day (bpd) of output to global supply each month, gradually winding down record cuts agreed in 2020.
The White House said it welcomed a decision, but added the United States had no plans to reconsider its decision to release crude reserves.
OPEC+ compliance with oil production cuts stood at 116 per cent in November, Algerian energy minister Mohamed Arkab said on Thursday, indicating the group continues to produce under its agreed targets.
Lack of clarity on the severity of the Omicron also led to gyrations in crude prices.
While some scientists have said the symptoms were mild, U.S. Treasury Secretary Janet Yellen warned the variant could slow global economic growth by exacerbating supply chain problems and depressing demand.
The European Union’s public health agency also said the variant could be responsible for more than half of all COVID-19 infections in Europe within a few months.
Global oil prices have lost more than $10 a barrel since last Thursday, when news of the variant first shook investors. The first case of Omicron was reported in the United States on Wednesday.
The new variant poses a threefold higher risk of reinfection than the currently dominant Delta variant and the Beta variant, a group of South African health bodies said.
Still, JP Morgan Global Equity Research said oil prices were expected to overshoot $125 a barrel next year and $150 in 2023 due to capacity-led shortfalls in OPEC+ production.
U.S. Deputy Energy Secretary David Turk said President Joe Biden’s administration could adjust the timing of its planned release of strategic crude oil stockpiles if global energy prices drop substantially.
Also weighing on the market was U.S. inventory data showing that U.S. crude stockpiles fell less than expected last week, while gasoline and distillate inventories rose much more than forecast as demand weakened.
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