OPEC's production increase plan left the "back door", and the 70 mark on the oil station rebounded nearly $5 from the daily low

On Thursday (December 2), U.
S.
oil rose $1.
8, or 2.
75%, to close at $67.
37 per barrel
.
This follows OPEC+'s surprise adherence to its plan to slowly raise production, causing the benchmark crude oil contract to fluctuate
in a wide range of $5.
By the close, crude oil futures had returned to gains, but uncertainty surrounding the Omicron variant, efforts by governments to contain a new wave of infections, and expectations of increased supply kept traders on their toes
.

OPEC+ agreed to go ahead with its January production increase and hinted that they could revisit the production decision
at any time once the risk posed by the omicron strain to demand becomes clearer.
OPEC+ agreed on Thursday to add 400,000 barrels per day of crude
to global markets in January as planned, several unnamed representatives said.
However, they also left a "back door", that is, if the market changes, the production policy
can be adjusted temporarily.
The draft communiqué states that "it is still in session, pending further development of the epidemic, and will continue to closely monitor the market and make immediate adjustments if necessary"
.

The White House said on Thursday it welcomed the decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to gradually increase oil production, but added that the United States had no plans to reconsider its decision
to release crude reserves.
For weeks, Biden administration officials have been publicly pressuring OPEC+ members to increase oil production to help lower U.
S.
energy prices
.
Concerns about inflation have become a political issue
for Biden.

White House spokesman Psaki said: "We appreciate the close coordination in recent weeks with our partners Saudi Arabia, the United Arab Emirates and other OPEC+ producers to help address price pressures
.
We welcome today's decision to continue to increase crude oil production
by 400,000 b/d in parallel with our recent concerted release of the Strategic Petroleum Reserve.
Asked if Washington would reconsider its decision to release the reserves, Psaki made clear: "We have no plans
to reconsider.
"

Oil prices are still expected to rise,
Goldman Sachs analysts said OPEC+'s decision on Thursday to increase production as planned will not disrupt the ongoing structural bull market.
The bank sees "very clear upside risks"
to its forecast for Brent crude oil averaging $85 per barrel in 2023.
U.
S.
shale producers will be cautious
about spending plans for 2022 due to the recent pullback in oil prices.
At a time when shale production growth is slowing, OPEC's spare capacity will be reduced
sooner than if the group decides to suspend production increases.
This is all the more true
if there is no deal to allow more Iranian oil to enter the market next year.

Analysts also noted that the recent drop in oil prices over fears that the omicron variant would hurt demand has gone too far, and that current price levels offer "attractive opportunities"
to reinvest.
In the short term, the market needs more information about the toxicity of the latest variant for oil prices to start rebounding; And more evidence of the physical market's tightness may be needed to push oil prices above
$80.

J.
P.
Morgan Global Equity Research said oil prices are expected to exceed $125 a barrel next year and more than $
150 in 2023 due to a gap in OPEC+ production due to production capacity.
With the actual output potential of OPEC+ discovered, it should push up the risk premium for oil prices
.
OPEC+ will slow its promised production increases in early 2022 and believes the group is unlikely to increase supply
unless oil prices are well supported.
The bank forecasts that global oil demand will reach 99.
8 million to 101.
5 million barrels
per day in 2022-23.