Oil Ekes Out Modest Gains After "Genius" OPEC Moderates Output Decision

Meanwhile, bullish Goldman views omicron oil price rout as overblown: File Image/Pixabay

In what was described as a stroke of genius, the Organization of the Petroleum Exporting Countries' (OPEC) decision to quickly adjust output if government reaction to the omicron variant impacts the market caused oil to eke out modest gains on Thursday.

OPEC stated its intention after saying it would proceed with planned production increases of 400,000 barrels per day (bpd).

Amrita Sen, chief oil analyst at consultant Energy Aspects, told media, "The genius move was keeping this meeting open: you will not be brave enough to sell against that."

Indeed, West Texas Intermediate rose 93 cents to settle at $66.50, while Brent climbed 80 cents to $69.67 per barrel.

To show just how dramatically and quickly omicron has changed market perception, crude prices plunged 4.8 percent earlier in Thursday's session before OPEC's pledge to adjust output if needed, when Russia reportedly back the cartel's continuation of increase; prior to Omicron, traders fretted over rising demand and not enough reserves to satisfy it.

Goldman Sachs Group was one of the rare analytical bodies to state that recent price declines driven by omicron panic have been overdone and that current price levels present "compelling opportunities" to reinvest.

The bank added that OPEC's strategy eases tensions with the White House, which coordinated the release of national stockpiles among major oil consuming countries last month.

Meanwhile, European shares posted their best session in almost six months as investors picked up stocks that were hammered in the past few sessions by omicron worries; Andrea Cicione, chief analyst at TS Lombardresearch, observed, "In the short term, uncertainty and therefore market volatility will continue until we get greater clarity on the resistance to vaccines and the lethality and transmissibility of omicron."

Rohan Reddy, research analyst at Global X, said that while omicrom induced restrictions could result in WTI trading in the $65 range for the near term, "I think the most likely outcome is this seems to be under control: vaccination programs are being rolled out fairly effectively, so you could see prices move into that $75 [to] $80 range in [the first quarter], and I think the real economic rebound is probably going to happen afterward."