Oil rises 1% ahead of OPEC meeting under Omicron cloud

Brent crude futures gained $1.01, or 1.5%, to $70.24 a barrel, after a 5.4% slump on Tuesday

Oil prices clawed back some losses on Wednesday after steep falls in the previous session, as major producers prepared to discuss how to respond to the threat of a hit to fuel demand from the Omicron variant.

US West Texas Intermediate (WTI) crude futures rose 78 cents, or 1.2 per cent, to $66.96 a barrel at 0122 GMT, after a 3.9 per cent drop on Tuesday.

Brent crude futures gained $1.01, or 1.5 per cent, to $70.24 a barrel, after a 5.4 per cent slump on Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC) will meet on Wednesday after 1300 GMT ahead of a meeting on Thursday of OPEC+, which includes OPEC and allies including Russia.

While some analysts expect OPEC+ will pause plans to add 400,000 barrels per day of supply in January in light of the potential hit to demand from travel curbs to rein in the spread of the Omicron variant, several OPEC+ ministers have said there was no need to change course.

"The market continues to look for signs of any impact of Omicron on demand," ANZ Research commodity analysts said in a note.

Even if OPEC+ agrees to go ahead with its planned supply increase in January, producers may struggle to add that much.

A Reuters survey found OPEC pumped 27.74 million bpd in November, up 220,000 bpd from the previous month, but that was below the 254,000 bpd increase allowed for OPEC members under the OPEC+ agreement.

In a bearish sign on demand, data from the American Petroleum Institute industry group showed US crude stocks fell by 747,000 barrels in the week ended Nov. 26, according to market sources, which was a smaller decline than expected.

Ten analysts polled by Reuters were expecting crude stockpiles to fall by about 1.2 million barrels.

At the same time, gasoline inventories rose by 2.2 million barrels compared with analysts' forecasts for no change, while distillate stocks rose by 789,000 barrels, which was a bigger build than analysts had expected.