OPEC+ Likely to Be Cautious on Oil Demand at Meeting, Vitol Says - Bloomberg

OPEC+ Likely to Be Cautious on Oil Demand at Meeting, Vitol Says - Bloomberg

The oil producers’ group OPEC+ will likely take a cautious stance when deciding this coming week whether to go ahead with planned output increases after the emergence of a new coronavirus variant sent crude prices tumbling, according to Vitol Group.

There are signs that demand may be weakening in some markets going in to the winter months in Asia and Europe, said Mike Muller, the head of the Asia unit at Vitol, the world’s biggest independent oil trader. The new coronavirus variant will probably lead to more flight cancellations this week, he said.

U.S. crude plunged more than 10% Friday, dropping below $70 for the first time since September, and Brent had its seventh-steepest drop on record as news of the omicron variant spooked traders amid light trading after the American Thanksgiving holiday. OPEC+ was already voicing concern over excess supply after the U.S. and others announced plans to release oil from strategic reserves.

“OPEC+ have erred on the side of caution,” Muller said on a weekly webinar by Dubai consultancy Gulf Intelligence. “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.”