Oil prices claw back losses ahead of OPEC meeting

MELBOURNE Reuters -- Oil prices clawed back some losses on Wednesday after steep falls in the previous session, as major producers prepared to discuss how to respond to the threat of a hit to fuel demand from the Omicron variant.

The U.S. West Texas Intermediate WTI crude futures increased by 78 cents, or 1.2%, to $66.96 a barrel at 0122 GMT, after a 3.9% drop on Tuesday.

After a 5.4% slump on Tuesday, the price of crude futures gained $1.01, or 1.5%, to $70.24 a barrel.

The Organization of the Petroleum Exporting Countries OPEC will meet on Wednesday after 1300 GMT ahead of a meeting of OPEC on Thursday, which includes Russia and OPEC.

Some analysts think OPEC will pause plans to add 400,000 barrels of supply in January due to the potential hit to demand from travel curbs to combat the spread of the Omicron variant, but several OPEC ministers said there was no need to change course.

The market continues to look for signs of the impact of Omicron on demand, according to commodity analysts at ANZ Research.

Even if OPEC agrees to go ahead with its planned supply increase in January, producers may struggle to add that much.

A Reuters survey showed that OPEC pumped 27.74 million barrels of water per day in November, up 220,000 barrels per day from the previous month, but that was less than the 254,000 barrels per day increase allowed for OPEC members under the OPEC agreement.

According to market sources, the U.S. crude stock fell by 747,000 barrels in the week ending Nov. 26, a bearish sign on demand, according to the American Petroleum Institute industry group.

Ten analysts polled by Reuters said crude stockpiles would fall by about 1.2 million barrels.

At the same time, gasoline inventories rose by 2.2 million barrels compared to analysts' forecasts for no change, while distillate inventories rose by 789,000 barrels, which was a bigger build than analysts had anticipated.