Oil slips below $80 after OPEC+ output hike decision

Summary:

• OPEC+ sticks to plan to boost output in February
• Concerns over impact of Omicron surge
• US stocks rose sharply last week -API
• US EIA stocks data due at 1530 GMT

Oil prices slipped below $80 a barrel on Wednesday after OPEC+ producers stuck to an agreed output target rise for February and investors assessed the impact of a spike in Covid-19 cases caused by the Omicron variant.

Brent crude futures were down 18 cents, or 0.23%, to $79.82 a barrel by 0945 GMT, while US West Texas Intermediate (WTI) crude futures declined 23 cents, or 0.3%, to $76.76.

OPEC+ producers, which include members of the Organization of the Petroleum Exporting Countries along with Russia and others, on Tuesday agreed to add another 400,000 barrels per day of supply in February, as they have done each month since August. 

The United States reported nearly 1 million new coronavirus infections on Monday, the highest daily tally of any country in the world and nearly double the previous US peak set a week earlier.

While OPEC+ raised its output target, it will likely struggle to reach it, as members including Nigeria, Angola and Libya face difficulties ramping up production, Barclays analysts said in a note.

"OPEC+ has adopted the path of least (political) resistance, as it continues to stay the course on increasing output targets, but actual incremental supplies are likely to be much smaller, similar to the demand effect from Omicron."

The bank expects Brent oil prices to average $80 a barrel in 2022.

Data showing a sharp rise in US inventories last week also weighed on prices.

US gasoline stockpiles rose by 7.1 million barrels in the week to 31 December, the American Petroleum Institute (API) reported late on Tuesday. Distillate stockpiles climbed by 4.4 million barrels in the week.

Stocks data from the US Energy Information Administration will be published at 1530 GMT.