LONDON—Oil prices were largely steady on Tuesday as investors expected major producers to agree to stick to their planned output increase at their meeting later in the day amid diminishing concerns over the spread of the Omicron variant of COVID-19.
Brent crude was up 22 cents, or 0.3 percent, at $79.20 a barrel at 0939 GMT, while U.S. West Texas Intermediate (WTI) crude rose by 21 cents, or 0.3 percent, to $76.29 a barrel.
OPEC+, which groups producers from the Organization of the Petroleum Exporting Countries (OPEC) with others including Russia, has raised its output target each month since August by 400,000 barrels per day (bpd).
“Number one driver (of global oil prices) at the moment is management of the supply side of the market by (producer alliance) OPEC+,” said Virendra Chauhan, an analyst from Energy Aspects.
RBC Capital Markets analysts said OPEC+ was unlikely to change course given the current price outlook, pressure from the administration of U.S. President Joe Biden to boost supply, and no major new COVID-19 mobility curbs.
“Though Omicron cases continue to climb in key geographies, the absence of widespread lockdown restrictions will likely keep near-term demand concerns in check,” RBC analysts said in a note.
Britain’s vaccine minister said people being hospitalized with COVID-19 in the United Kingdom were broadly showing less severe symptoms than before.
French Finance Minister Bruno Le Maire said although the surge of the fast-spreading Omicron variant was disrupting some sectors, there was no risk of it “paralysing” the economy, and stuck to a forecast of 4 percent growth for France’s GDP in 2022.
Factory activity also rose in Asia last month, suggesting the direct hit from the variant on output appeared subdued.
However, analysts warned that OPEC+ may have to change tack if the tension between the West and Russia over Ukraine flares up and hits fuel supplies, or Iran’s nuclear talks with major powers make progress, which would lead to an end to oil sanctions on Iran.
“We think these two events represent major wildcards that could quickly alter the price trajectory and test OPEC’s rapid response mechanism,” RBC analysts said.
