Oil jumped more than 1 per cent on the first trading day of the new year, ahead of an OPEC+ meeting on Tuesday to discuss production policy.

Futures in New York topped $76 a barrel after toggling between earlier gains and losses. The Organization of Petroleum Exporting Countries cut its estimate of the surplus in global oil markets this quarter, a day before the group and its allies consider another output boost. The 23-nation alliance is on track to ratify another modest output revival of 400,000 barrels a day in February, delegates said.

Last year, oil posted its biggest annual gain since 2009 as the roll-out of COVID-19 vaccines helped economies reopen, boosting energy demand. While OPEC+ is poised to add another 400,000 barrels a day to global supply, there are still concerns about longer-term consumption as China tackles a virus flare-up and the Omicron variant leads to flight cancellations worldwide.

Although oil demand is expected to recover to pre-pandemic levels around mid-2022, steady OPEC+ supply increases, a recent uptick in US crude output, and a softer seasonal demand period ahead are expected to lift global stockpiles.