Oil soars as OPEC+ poised to intervene if demand falls

General view shows the Cadereyta refinery of Mexican state oil company Pemex, in Cadereyta, on the outskirts of Monterrey, Mexico, April 20, 2020. REUTERS/Daniel Becerril/File Photo

LONDON, Dec. 3 (Reuters) – Oil prices rose Friday after producer group OPEC+ said it could revise its policy to increase production in the near term if demand for oil collapsed due to an increasing number of pandemic lockdowns.

Brent oil rose $2.68 cents, or 3.9%, to $72.35 a barrel at 1442 GMT, though it was still on track to fall for the sixth straight week. US crude rose $2.47, or 3.7%, to $68.97 a barrel.

The Organization of the Petroleum Exporting Countries, Russia and Allies, a group known as OPEC+, surprised the market on Thursday when it stuck to its plans to add 400,000 barrels per day (bpd) in January. read more

“The decision to continue increasing monthly crude oil production is a sign of confidence in the near-term demand outlook. In other words, OPEC+ is counting on the new Omicron variant not having a lasting impact on oil demand,” said PVM. in a note.

But producers left the door open to change policies quickly if demand suffered from measures to contain the spread of the Omicron coronavirus variant. They said they could meet again for their next scheduled meeting on January 4.

“Brent is up to $71 a barrel, bringing it about $5 above yesterday’s daily low. So what’s the explanation? OPEC+ said it could reconsider yesterday’s decision in the near term if market conditions change.” said Carsten Fritsch of Commerzbank.

In addition, OPEC is struggling to actually implement the planned production increases. read more

Markets for all assets have been racing all week with the rise of Omicron and speculation that it could trigger new lockdowns and dent fuel demand.

The World Health Organization urged countries to vaccinate their people to fight the virus, saying travel restrictions were not the answer. read more

For the week, Brent was poised to fall about 0.5%, for the sixth straight week for the first time since November 2018. WTI was on track for a weekly gain of about 1.4%, after five weekly declines.

JPMorgan analysts said the market decline implied an “excessive” blow to demand, while global mobility data, excluding China, showed mobility continues to recover, averaging 93% from 2019 levels last week.

“So far, we see no signs of weakening demand on a (a) global scale,” the JPMorgan analysts said in a note.

Additional reporting by Roslan Khasawneh and Sonali Paul; Editing by David Evans and Edmund Blair

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