Oil slipped below $78 a barrel on Monday (Jan. 3) as investors awaited the meeting of OPEC and its allies. Brent crude, the international benchmark, was down 42 cents, or 0.5%, to $77.36 a barrel at 1402 GMT, having earlier risen as high as $79.05. U.S. West Texas Intermediate (WTI) crude slipped 52 cents or 0.7%, to go for $74.69.
According to media reports, OPEC+, are expected on Tuesday (Jan. 4) to agree to
increase production by 400,000 barrels per day in February.
Last week, Saudi Arabia’s King Salman said the OPEC+ production agreement was needed for oil market stability and that producers must comply with the pact.
Oil gained some support earlier in Monday’s session from an outage in OPEC member Libya. Oil production in the North African country will be reduced by another 200,000 bpd this week because of urgent repairs on a pipeline, the Libyan National Oil Corporation said over weekend.
Last year, Brent and WTI posted more than 50% gains. Brent ended 2021 up 50.5%, its biggest gain since 2016, while WTI posted a 55.5% gain, the strongest performance for the benchmark contract since 2009, when prices soared more than 70%, according to Reuters.
Both contracts saw price increases as fuel demand roared back and OPEC+ supply cuts erased a supply glut . The contracts touched their 2021 peak in October, with Brent at $86.70 a barrel, the highest since 2018, and WTI at $85.41 a barrel, the highest since 2014.
Some experts expect more gains in 2022 as jet fuel demand catches up.
“Crude and oil product prices should benefit from oil demand moving above 2019 levels,” said a report from UBS analysts including Giovanni Staunovo. “We expect Brent to rise into a $80–90 range in 2022.”
Meanwhile, OPEC announced on Monday (Jan. 3) it has picked industry veteran Kuwaiti oil executive Haitham al-Ghais to become the organization’s secretary-general from August.
Al-Ghais, who was the only candidate, and was appointed by acclamation rather than a ballot on Monday- is set to replace the outgoing OPEC’s head Mohammed Barkindo, as the group and its allies navigate a delicate recovery from the Covid-19 crisis.
Commenting on Barkindo’s work, the OPEC said in a statement that he “has been instrumental in expanding historical efforts to support sustainable oil market stability through enhanced dialogue and cooperation with many energy stakeholders… These efforts are widely credited with helping to stabilize the global oil market since the unprecedented market downturn related to the COVID-19 pandemic.”
Al-Ghais with a three-decade oil industry career currently serves as Deputy Managing Director for International Marketing at the Kuwait Petroleum Corporation.
Ghais said he one of his top priorities would be to “preserve and nurture” OPEC’s ties with Russia and that his diplomatic background, having served in Kuwait’s foreign ministry and been the son of a career diplomat, would be an asset to him in the role.
With reporting by Reuters, Bloomberg, Platts