(Bloomberg). — The first day of trading in the New Year saw oil jump more than 1% ahead of an OPEC+ meeting Tuesday, which will discuss production policies.

After balancing between gains or losses, futures in New York reached $76 per barrel. One day prior to the Organization of Petroleum Exporting Countries examining another boost in output, the Organization of Petroleum Exporting Countries reduced its estimation of global oil market surpluses this quarter. Delegates said that the 23-nation group is poised to approve a modest increase in output of around 400,000 barrels per day for February.

Libya’s crude output is expected to fall to the lowest in more than a year as workers try to fix a damaged pipeline. The outage comes less than two weeks after militia shuttered Sharara, the country’s biggest oil field. The outage is also a result of the spread of Covid-19, an omicron version of Covid-19. 

“Oil demand is widely expected to set new all-time highs above the 100 million barrel a day mark in 2022,” said Ryan Fitzmaurice, a commodities strategist at Rabobank. “The global supply-demand balance is expected to remain tight,” given that there have been production issues recently, he said.

Libya is expecting its oil production to decrease by another 200 000 barrels per day within the next week. Combined with supply lost from the shutdown of its Sharara field, that will trim the nation’s overall output to about 700,000 barrels a day.

“I think OPEC+’s decision is a foregone conclusion and omicron news and data will remain the major influence on oil sentiment,” said Vandana Hari, founder of consultant Vanda (NASDAQ:) Insights in Singapore. “We’re likely seeing some bargain-hunting today after a rush to sell at the end of last week.” 

Check out: Key Oil Spread Signs Omicron Concerns Could Be Easing: Chart

Oil saw its largest annual increase since 2009. The rollout of Covid-19 vaccinations allowed economies to reopen and boosted energy demand. The OPEC+ initiative is expected to increase global oil supply by 400,000 barrels per day, but there remain concerns over long-term consumption. China has a viral flare-up. This could also lead to cancellations of flights worldwide.

Oil demand will recover to pre-pandemic levels by mid-2022. However, steady OPEC+ supplies increases and a softer seasonal demand period in the future will increase global stockpiles. Third Bridge’s global sector leader Peter McNally said that. 

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