(Bloomberg) — Oil edged higher in Asian trading before an OPEC+ meeting that’s expected to see the alliance agree to another output boost next month.
Futures in New York rose above $76 a barrel after climbing 1.2% Monday. The OPEC+ alliance is set to ratify a 400,000-barrel a day production increase for February when it gathers Tuesday, according to a Bloomberg survey. The group will add more supply despite some concerns about demand following Covid-19 flare-ups across the world including in China, the biggest crude importer.
The supply-demand backdrop is looking better for OPEC+, with the cartel cutting estimates for a surplus expected in the first quarter due to weaker output growth from its rivals. Oil’s market structure has also firmed in a bullish backwardation pattern, even as the omicron strain of the virus turbocharges infection rates across the world.
“There seems little holding back OPEC+ from performing another scheduled increase, especially given that prices have recovered from the early December omicron collapse,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “Volatility is expected today ahead of the meeting.”
The OPEC+ Joint Technical Committee, which analyzes the market on behalf of ministers, 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, according to a report seen by Bloomberg.
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