Oil prices are hovering around $76 U.S. a barrel ahead of an OPEC+ meeting that’s expected to see the alliance agree to an output boost in February.
OPEC+ is expected to ratify a 400,000-barrel-a-day increase for February when it gathers today (January 4). That’s despite concerns that demand could be weakened by COVID-19 flare-ups, including in China, the world’s biggest oil importer.
The overall supply-demand backdrop is looking better for OPEC+, with the cartel cutting estimates for a surplus in the first quarter amid slower output growth from its rivals.
Recent weeks have seen a litany of supply issues in oil producing countries, including in OPEC member Libya, where production is expected to fall again this week.
Oil’s market structure remains in a bullish backwardation pattern, which indicates continued tightness of supply.
West Texas Intermediate crude oil prices rose 0.5% to $76.46 U.S. a barrel in London trading, while Brent crude oil for March settlement also gained 0.5% to trade at $79.34 U.S. per barrel in European trading.
The OPEC+ Joint Technical Committee said it sees a surplus of 1.4 million barrels a day in the first three months of 2022, about 25% less than it estimated a month ago.
