Oil Prices Up 1.5% as OPEC+ Plans Output Increase

The Headquarters of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna, Austria on 17 December, 2018. (Photo by Beata Zawrzel/NurPhoto)

An agreement by OPEC+ to stick to the planned increase in oil output for February has led to a 1.5% rise in oil prices.

Brent crude was up $1.15, or 1.5%, at $80.13 a barrel, its highest since November and US West Texas Intermediate (WTI) crude rose $1 cents, or 1.31%, to $77.09.

OPEC+, comprising of the Organization of the Petroleum Exporting Countries and allies, are sticking with the planned increase for February based on indications that the Omicron coronavirus variant would have only a mild impact on demand.

“The oil market is bullish today as a result of optimism sourced from today’s monthly OPEC+ meeting, which is helping oil prices trade higher,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.

Your Friends Also Read:  Nigeria Bourse Moves 637.49M Shares Worth N5.23Bn In 6,354 Deals

OPEC+ agreed to boost oil production by 400,000 barrels per day (bpd) in February. This decision reflects easing concerns about a big surplus in the first quarter, as well as a desire to provide consistent market guidance.

Analysts warn that OPEC+ may have to change its tack if tensions between the West and Russia over Ukraine escalate and impact fuel supplies, or if Iran’s nuclear talks with major powers progress, which would mean the end of oil sanctions against Tehran.

“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 in a note.

Your Friends Also Read:  South Sudan Secures $52.3M IMF Loan To Address COVID-19 Challenges

Caroline Bain, the chief commodities economist at Capital Economics, said Libya’s production is likely to decline by 500-600,000 bpd in the next few weeks, more than offsetting the planned monthly increase in OPEC+ production.

According to the state oil firm, output will be reduced by 200,000 barrels per day for a week due to maintenance on a main pipeline, adding to disruptions two weeks ago after militia blocked operations at the Sharara and Wafa fields.

Nevertheless, Bain said Capital Economics remains of the view that oil prices will come under downward pressure as OPEC+ continues to raise production in the coming months and demand growth normalizes. Capital Economics predicts that Brent Crude will be just $60 per barrel by the end of 2022.

Your Friends Also Read:  Ethiopia plans sale of minority stake in state-owned telecom firm

All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from News Central TV.

Contact: digital@newscentral.ng


Leave a Reply

Previous Article

D.R. Congo Central Bank Plans to Slash Main Interest Rate to 7.5%

Next Article

Watford Finally Release Senegalese Winger, Ismaila Sarr for AFCON

Related Posts
Powered by Live Score & Live Score App