The rise of international oil prices is limited, OPEC+ is full of confidence, but the demand side is facing new variables. The provider FX678

On Wednesday (January 5), international oil prices rose, as OPEC+ agreed to maintain the policy of increasing production by 400,000 barrels per day each month, believing that the Omi Keron variant will only have a short-term impact on global energy demand. However, the gains have been held back by rising fuel inventories in the United States, which shows that with the large-scale surge in new crown cases caused by the Ome Keron variant, the demand for the world‘s largest oil consumer has fallen.

At 14:55 Beijing time, NYMEX crude oil futures rose 0.13% to 77.09 US dollars per barrel; ICE Brent crude oil futures rose 0.17% to 80.14 US dollars per barrel.

Oil prices climbed more than 1% last day and hit a new high since late November last year. Market participants believe that major oil-producing countries will decide to increase supply next month, indicating that they believe the surge in new crown cases will not hit demand in the long term.

But the surge in U.S. inventories exceeded analysts’ expectations, hurting investors’ optimistic outlook. According to data released by the American Petroleum Institute (API) on Tuesday (January 4), as of the week of December 31, crude oil inventories plummeted by 6.432 million barrels, but gasoline inventories soared by 7.061 million barrels, and distillate inventories increased by 4.38 million barrels. .

Sugandha Sachdeva, Vice President of Commodity Research at Religare Broking, said: “As more and more producers find it profitable to increase production, rising U.S. production puts pressure on oil prices.”

As expected, OPEC+ agreed on Tuesday to increase production by another 400,000 barrels per day in February. This reflects that OPEC+ believes that the Omi Keron variant will only have a short-term impact on global energy demand. Since August, OPEC+ has been implementing a plan to increase production by 400,000 barrels per day.

The United States had previously urged OPEC+ to speed up the pace of crude oil production increases to help the global economy recover from the epidemic, and to cool the rise when oil prices approached $80 per barrel. But the alliance said that the market does not need more oil.

Rystad Energy analyst Bjornar Tonhaugen said OPEC+’s confidence has increased, partly because global real-time transportation data show that Omi Keron has not had any significant impact on oil demand. He also added: “Libya’s continued (oil production) interruption, Nigeria’s difficult efforts to resume production, and the expected reduction in Russia’s production capacity have increased the supply-side benefits.”

Although OPEC+ raises its production target every month, as some member states are struggling to cope with capacity constraints, actual output has been below the target. The International Energy Agency (IEA) said last month that OPEC+ oil-producing countries produced 730,000 barrels per day and 650,000 barrels per day lower than their targets in October and November, respectively.

Vandana Hari, founder of Vanda Insights, an oil market analysis company, said: “Two consecutive days of strong gains have brought crude oil into the overbought area.” Market confidence will continue to fluctuate back and forth.

On the one hand, people may increasingly hope that the Omi Keron variant may herald the transformation of the new crown epidemic from a pandemic to a more easily controllable disease, at least in regions with high vaccination rates around the world. But on the other hand, oil prices may still be hit because countries are still on high alert. As long as the infection rate is increasing sharply, the government is not prepared to relax restrictions.