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Oil Up, Bets Grow That Major Producers Will Pause Adding Crude Supply Over Omicron -Breaking

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© Reuters.

By Gina Lee

Investing.com – Oil was up Tuesday morning in Asia, continuing its recovery from last week’s fall. Investors are still betting that the Omicron coronavirus variant will cause major oil producers to halt adding crude supplies.

The price of oil rose 0.4% to $73.69 at 11:28PM ET (which is 4:28AM GMT). It also jumped by 1.03%, or $70.67. Last Friday’s oil price plunged to 12% due to fears the omicron version would cause more lockdowns that could dent fuel demand.

The World Health Organization said on Monday that Omicron posed a very high risk of infection surges, and has classified it as a “variant of concern.” Several countries such as the Netherlands, Denmark, and Australia reported omicron cases over the weekend and other countries have imposed travel curbs.

Investors now anticipate that the Organization of the Petroleum Exporting Countries (OPEC+), which is unsure about the outlook for fuel demand, will halt plans to increase supply by 400,000 barrels per hour (bpd), in January. December 2nd will see the supply cartel meet.

“We think the group will lean towards pausing output hikes in light of the Omicron variant and the oil stockpile release by major oil consumers,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

OPEC+ was already reconsidering its plan after the U.S. and other major consumers announced a smaller-than-expected coordinated release from the Strategic Petroleum Reserve during the previous week.

“Following the global strategic reserve releases and the announcement of dozens of countries restricting travel to and from South Africa and neighboring nations, OPEC and its allies can easily justify an output halt or even a slight cut in production,” OANDA analyst Edward Moya said in a note.

Other news: The world’s powers and Iran resumed negotiations to revive a 2015 nuclear agreement. Diplomats made positive comments that gave the market an extra boost.

Investors await the U.S. crude-oil supply from American Petroleum Institute later in the morning.

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