Oil prices were flat on Tuesday ahead of a meeting where major producers are expected to stick to plans to add supply in February, as soaring COVID-19 cases have yet to spark lockdowns in the biggest fuel-consuming countries.
Brent crude futures gained 1 cent to $78.99 a barrel at 0239 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped 2 cents to $76.06 a barrel. The two benchmark contracts both climbed more than 1% on Monday.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and allies – together called OPEC+ – are due to meet on Tuesday. The group is likely to stick to its plan to increase output by 400,000 barrels per day in February, as it has done each month since August.
RBC Capital Markets analysts said OPEC+ was unlikely to change course given the current price outlook, pressure from the administration of U.S. President Joe Biden to boost supply, and no major new COVID-19 mobility curbs.
“Though Omicron (COVID-19 variant) cases continue to climb in key geographies, the absence of widespread lockdown restrictions will likely keep near-term demand concerns in check,” RBC analysts said in a note.
However they said OPEC+ may have to change tack if tension between the West and Russia over Ukraine flares up and hits fuel supplies, or Iran’s nuclear talks with major powers make progress, which would lead to an end to oil sanctions on Iran.
“We think these two events represent major wildcards that could quickly alter the price trajectory and test OPEC’s rapid response mechanism,” RBC analysts said.