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LONDON  - OPEC and its allies will decide on Thursday whether to release more oil into the market or restrain supply amid big gyrations in crude prices, a U.S. release from oil reserves and fears over the new Omicron coronavirus variant.

Brent has tumbled to about $70 a barrel, down from October's three-year highs above $86. Prices in November registered their biggest monthly decline since the start of the pandemic as the Omicron variant raised fears of a glut. [O/R]

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have resisted U.S. requests for speedier increases in oil output to support the global economy.

Producers have said they did not want to hamper a fragile energy industry recovery with oversupply.

Under its existing pact, OPEC+ agreed to raise output by 400,000 barrels per day (bpd) each month, winding down record cuts agreed in 2020 when demand crashed because of the pandemic.

But market uncertainties leave its next move in the balance.

Two OPEC+ sources said the group would discuss pausing the January increase as an option, while two sources said they expected the 400,000 bpd rise to go ahead. One source even said he expected a cut in production, without giving any figures.

Russia and Saudi Arabia, the biggest OPEC+ producers, said before this week's talks, which began with an online OPEC meeting on Wednesday, that there was no need for a knee-jerk reaction to amend policy.

OPEC+ experts said in a report seen by Reuters on Wednesday that the impact from Omicron was not yet clear, even though many countries were introducing lockdowns and other restrictions.

Even before concerns about Omicron emerged, OPEC+ had been weighing the effects of last week's announcement by the United States and other major consumers that they would release emergency crude reserves to temper energy prices.

U.S. President Joe Biden's administration could adjust the timing of any release if prices dropped substantially, U.S. Deputy Energy Secretary David Turk told Reuters on Wednesday.

OPEC+ forecast a 3 million bpd surplus in the first quarter of 2022 after the release of reserves, up from a 2.3 million bpd surplus previously forecast.

Graphic: Oil market balances in 2022 - https://graphics.reuters.com/OIL-OPEC/znvnexeeopl/chart.png

Last year, OPEC+ made record output cuts of 10 million bpd, equivalent to about 10% of global supply. It has scaled those back so cuts still in place now stand at about 3.8 million bpd.

However, OPEC+ has been regularly producing below its target level as some members have struggled to rebuild output, producing about 700,000 bpd less than planned in both September and October, the International Energy Agency (IEA) says.