General view shows Mexican state oil firm Pemex’s Cadereyta refinery, in Cadereyta, on the outskirts of Monterrey, Mexico April 20, 2020. REUTERS/Daniel Becerril/File Photo

LONDON, Dec 2 (Reuters) – 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 $1.56, or 2.3%, to $70.43 a barrel by 1040 GMT, having eased 0.5% in the previous session.

U.S. West Texas Intermediate (WTI) crude futures gained $1.52, or 2.3%, to $67.09 after a 0.9% drop on Wednesday.

Global oil prices have lost more than $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. read more

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. read more

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. read more

U.S. 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. read more

Gains in oil markets on Thursday were capped as weekly U.S. inventory data showed that U.S. crude stocks fell less than expected last week, while gasoline and distillate inventories rose much more than expected while demand weakened.

Additional reporting by Yuka Obayashi
Editing by David Goodman

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