LONDON (Dec 2): Climbing oil prices on Thursday erased the previous day's losses, with investors adjusting positions ahead of an OPEC+ decision on supply policy, though gains were capped by fears that the Omicron coronavirus variant could hit fuel demand.
Brent crude futures rose US$1.56, or 2.3%, to US$70.43 a barrel by 1040 GMT, having eased 0.5% in the previous session.
US West Texas Intermediate (WTI) crude futures gained US$1.52, or 2.3%, to US$67.09 after a 0.9% drop on Wednesday.
Global oil prices have lost more than US$10 a barrel since last Thursday, when news of Omicron first shook investors.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, are likely to decide on Thursday whether to release more oil into the market as previously planned or to restrain supply.
The meeting is scheduled to start at 1300 GMT.
Since August the group has been adding an additional 400,000 barrels per day (bpd) of output to global supply each month, gradually winding down record cuts agreed in 2020.
The new coronavirus variant, however, has complicated the decision-making process, with an OPEC+ source saying the group's ministers are likely to discuss pausing a planned oil output increase in January as one option.
Jeffrey Halley, senior market analyst at OANDA, said he believes that the collapse in oil prices and uncertainties surrounding Omicron will prompt OPEC+ to call a temporary halt to production increases.
"That may restore a modicum of stability to oil markets," he added.
Fears over the impact of the Omicron variant rose after the first case was reported in the United States.
US Deputy Energy Secretary David Turk said President Joe Biden's administration could adjust the timing of its planned release of strategic crude oil stockpiles if global energy prices drop substantially.
Gains in oil markets on Thursday were capped as weekly US inventory data showed that US crude stocks fell less than expected last week, while gasoline and distillate inventories rose much more than expected while demand weakened.