Oil falls after Opec+ sticks to deal on hikes in output

London — Oil prices slipped below $80 a barrel on Wednesday after Opec+ producers stuck to an agreed output target rise for February and investors assessed the impact of a spike in Covid-19 cases caused by the Omicron variant.

Brent crude futures were down 18c, or 0.23%, to $79.82 a barrel by 9.45am GMT, while US West Texas Intermediate (WTI) crude futures fell 23c, or 0.3%, to $76.76.

Opec+ producers, which include members of oil cartel Opec along with Russia and others, on Tuesday agreed to add another 400,000 barrels per day of supply in February, as they have done each month since August.

The US reported nearly 10-million new coronavirus infections on Monday, the highest daily tally of any country in the world and nearly double the previous US peak set a week earlier.

While Opec+ raised its output target, it will likely struggle to reach it, as members including Nigeria, Angola and Libya face difficulties ramping up production, Barclays analysts said in a note.

“Opec+ has adopted the path of least [political] resistance, as it continues to stay the course on increasing output targets, but actual incremental supplies are likely to be much smaller, similar to the demand effect from Omicron.”

The bank expects Brent oil prices to average $80 a barrel in 2022.

Data showing a sharp rise in US inventories last week also weighed on prices.

US petrol stockpiles rose by 7.1-million barrels in the week to December 31, the American Petroleum Institute (API) reported late on Tuesday. Distillate stockpiles climbed by 4.4-million barrels in the week.

Stocks data from the U.S Energy Information Administration will be published at 3.30pm GMT.

Reuters

Source: businesslive.co.za