WTI Hovering Around $ 76 As Traders Await OPEC+ Meeting

OPEC and allies will have their twenty fourth meeting Tuesday to proceed with their plan to increase production by 400,000 barrels per month in January; the move was agreed to in December aiming at stabilizing the rising oil prices caused by low supply and global supply remains low.

This may not be enough in short to medium term as some member countries are struggling to meet production targets, due to unrest in some cases and infrastructure issues in others areas, and have asked that their compensation periods be extended until June.

On the longer term, the extended period of high oil prices, which has persisted since the beginning of the pandemic, is expected to hasten the private sector’s move towards green energy and carbon neutral companies.

WTI has recently achieved some gains and trades now at USD 76.08 after slipping, on Monday, under $75.00 to one-week lows, as traders focus on surging Omicron infections hitting record highs in the UK, Europe and US and hospitalization surge’s impact on the market.

Rising OPEC+ and US output also play a role to weaken crude oil prices, with OPEC+ expected to agree to higher output during Tuesday’s meeting coinciding with US waging to use reserves.

Oil markets are not expected to be as tight as they were in mid 2021, namely a few months ago as OPEC+ and the US continue to raise output. Regarding OPEC+, sources said it is expected to stick to its 40000 barrel per day per month output hike plans when they meet, to add 400000 more barrels per day as of February.

Tuesday’s meeting, in Vienna, will discuss output policy, after agreeing on Monday to appoint Kuwait’s Haitham Al Ghais as OPEC’s new secretary-general. This appointment isn’t expected to have much impact on the cartel’s policy.

Last Friday’s Baker Hughes rig count data showed US oil and gas firms have added rigs for a seventeenth successive month, record a fresh high, while an EIA report showed US output has risen by 6% to just under 11.5M barrels per day in October, as US output recovered from hurricane outages in September.

During December, the total rig count rose by 17. For the quarter, the count was up 65, its fifth increase in a row.

For the year the count was up 235. That compares with a decrease of 454 rigs in 2020 and a decline of 278 rigs in 2019.