DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled the first trading day of the week higher, with the U.S. and international crude benchmarks recouping a portion of their Friday losses. Market participants turned their focus to the upcoming meeting among Organization of the Petroleum Exporting Counties and Russia-led partners with the group seen potentially delaying their planned production increase to balance the market against renewed travel resections tied to the emergence omicron variant of coronavirus.

OPEC+ ministers postponed their monthly policy meeting until Thursday, Dec. 2, to assess emerging risks from a new, highly mutated variant of coronavirus -- omicron. The variant was first detected in South Africa earlier this month and has now been found in more than 17 countries worldwide, prompting renewed travel restrictions from Japan to Chile. OPEC+ ministers, meanwhile, called for caution ahead of their scheduled meeting, downplaying the possibility of any changes to their production policy. The group was on course to bring back another 400,000 barrels per day (bpd) next month out of their record 9.7 million bpd cuts introduced at the beginning of the pandemic. OPEC+ still has about 3.8 million bpd of these cuts in place, and some analysts suggest that should the coalition choose to support prices against the threat of emerging variant, it might forgo planned increases until February, buying more time for the market to recover.

Analysts at JP Morgan Chase said in a note released Monday that OPEC+ "will defend prices by keeping inventories low, the market in balance and taking action to support optimal reservoir management through paced volume growth."

Fear of renewed lockdowns and a hit to global economic growth following the discovery of the omicron variant of the coronavirus sparked a plunge in stocks and commodities late last week, likely amplified by thin, holiday trading on the day after the Thanksgiving holiday.

There is still a lot unknown about this particular variant. So far, omicron appears to be quite transmittable but has not shown to be more lethal compared to the original strain of COVID-19. Dr. Angelique Coetzee, the South African doctor who first detected the new variant, said Sunday that omicron symptoms were mild and could be easily treated at home. There is little or no data available whether any omicron patients have been vaccinated or previously infected with another variant of COVID-19. Scientists also don't know how deadly omicron may be among more vulnerable populations. The lack of information, however, did not stop governments around the world to bring back new travel restrictions and curbs on economic activity. New York State declared state of emergency to take effect Friday, Dec. 3, a move that allows hospitals to turn away patients seeking non-urgent care, even though omicron have not yet been detected anywhere in the U.S.

Internationally, Japan and Israel banned all foreign visitors for 10 days as a precautionary measure against new variant. U.S. President Joe Biden said Monday that he did not anticipate putting additional travel restrictions into place "at this point," but did not rule the prospect out, as federal health officials brace for the first cases of the new variant to be detected in the U.S. "I expect this not to be the new normal. I expect the new normal to be everyone ends up getting vaccinated with a booster shot so we've reduced the number of people protected to such a low degree we're not seeing the spread of the virus," Biden said in a speech at the White House. Biden also ruled out lockdown as a strategy to slow the potential spread of the omicron variant.

On the session, NYMEX West Texas Intermediate futures for January delivery clawed back $1.80 per barrel (bbl) to settle at $69.95 bbl after plunging as much as $11 per bbl on Friday. International benchmark ICE January Brent advanced $0.72 for a $73.44-per-bbl settlement. Friday saw futures contracts for both U.S. and international crude benchmarks tumble by more than 10%, with both benchmarks suffering the largest one-day drop since April 2020.

NYMEX RBOB December futures rallied 4.77 cents to $2.0771 per gallon and front-month NYMEX ULSD surged 5.76 cents to finish at $2.1521 per gallon. The U.S. dollar index once again regained upward momentum against global peers to trade at 17-month high 96.338, up 0.23% against the basket of foreign currencies.

Liubov Georges can be reached at liubov.georges@dtn.com