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OPEC+ has moved two meetings scheduled for this week by a day in order to have more time to evaluate the implications of the latest coronavirus update about the emergence of a highly mutated variant.
Bloomberg reports, citing OPEC delegates, that the group had moved the meeting of its joint technical committee to Wednesday from Monday, and the meeting of the joint ministerial committee to Thursday from Tuesday. Another two meetings, of OPEC and OPEC+, will take place as originally planned, on Wednesday and Thursday.
News of the emergence of the omicron variant in southern Africa last week did on Friday what the release of 50 million barrels from the U.S. strategic petroleum reserve couldn't: it led to a sharp drop in oil prices, with Brent crude shedding over $10 in a single day and West Texas Intermediate falling below $70 per barrel for the first time in months.
Since then, however, oil prices have rebounded somewhat on expectations that OPEC+ might stop increasing oil production. Suggestions that the group may do just that came almost immediately after President Biden announced the release of crude from the strategic reserve. Now, with the new variant and renewed worry about the global economic recovery, worry about oil demand is on the rise, too, strengthening any internal OPEC+ arguments in favor of a suspension of output additions.
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Even so, for now, expectations are for a cautious approach on the part of OPEC and its partners in OPEC+.
"OPEC+ have erred on the side of caution," Mike Muller, head of Vitol's Asian business, told Bloomberg. "Post facto they've proven to be right. It is likely they will take into account these fundamentals and the possibility of a demand hit over the winter months."
"We saw some correction as the Friday's plunge in oil prices has been overdone," Nomura Securities senior economist Tatsufumi Okoshi told Reuters. "If the market falls further, OPEC+ may pause the planned increase of crude production to support prices," he added.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.