As major producers prepare to discuss how to respond to the possibility of a cut to fuel demand from the Omicron version, Crude oil prices jumped more than 4% on Wednesday, clawing back some losses after their worst monthly drops in percentage terms since March 2020.
Brent crude Futures and US West Texas Intermediate (WTI) front-month prices dropped by 16% and 21%, respectively.
After a 3.9 percent dip on Tuesday, WTI climbed 78 cents, or 1.2 percent, to $66.96 a barrel at 0122 GMT.
After a 5.4 percent drop on Tuesday, Brent crude futures rose $1.01, or 1.5 percent, to $70.24 a barrel.
Crude oil is currently trading at $67.88, up 1.70 percent from yesterday’s price of $66.18.
The Organization of Petroleum Exporting Countries (OPEC) will convene after 1300 GMT on Wednesday, ahead of an OPEC+ meeting on Thursday, which would include OPEC and allies such as Russia.
What is the meeting about?
On Wednesday, OPEC and its allies will begin two days of discussions to decide whether to maintain the current moderate monthly increase in production in the face of mounting Omicron fears.
Since August, the organization has been boosting 400,000 barrels per day to world supply as it gradually reduces record cuts imposed in 2020, when demand was slashed due to the pandemic.
However, some analysts believe OPEC+ will postpone its intentions to add 400,000 bpd to supply in January.
If OPEC+ does not raise production, experts at JP Morgan (JPM) predict oil might reach $150 per barrel.
The White House stated last week that the US will release a massive batch of 50 million barrels of crude oil from the emergency reserve (Strategic Petroleum Reserve). The move is being implemented to reduce the rise in oil costs. It will be available between mid-December and late December this year. Approximately 605 million barrels of petroleum are now held in reserve. As a result, after this discharge, they will have roughly 555 million barrels of crude oil.
The focus now moves to oil producers’ replies, which have irritated and worried OPEC members.