Oil went up in early Asian trading after the OPEC alliance decided to keep restoring supply, but also said it could revisit the decision at any moment due to high levels of uncertainty in the market.
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West Texas Intermediate advanced as much as 2.2% after closing up 1.4% on Thursday after the decision by the producer group. The cartel agreed to add 400,000 barrels of crude a day to global markets in January, a move that should please nations worried about high prices - notably the U.S.
See also: OPEC Sticks to Planned Supply Hike With Added Escape Clause
It left the door open to changing the plan at short notice. It is an unusual step that underscores the difficulty in assessing the supply-demand balance over the short term due to the omicron virus variant and the White House-led release of national reserves.
Since October, Crude has dropped sharply due to growing signs major consuming nations would tap their reserves, the emergence of the new virus variant and a more hawkish Federal Reserve. Some analysts think the declines have been excessive, with Goldman Sachs Group Inc. saying prices have far overshot the impact of omicron and Bank of America sticking to its $85 a-barrel forecast in 2022.
Morgan Stanley analysts led by Martijn Rats said that the decision of the OPEC could suggest that it is not all that worried about the demand impact of omicrons. It could indicate a more cooperative attitude from OPEC toward the U.S.
Brent's prompt timespread was 35 cents a barrel in backwardation, a bullish structure where near-term prices are higher than those further out, on Thursday. It is an improvement from 30 cents the day before, but is down from $1.30 a week ago.
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