Traders Expect OPEC+ to Trim Output Curbs
Analysts said fears that the rise in coronavirus cases could but a dent in global demand have led traders to believe that OPEC and its allies may hesitate to loosen output curbs as planned in January.
OPEC+ is due to hold a Joint Ministerial Monitoring Committee next week, which will give some indications of what the producers may decide at the next ministerial meeting on December 1.
Algeria’s energy minister said last week that OPEC+ could extend the group’s current oil production cuts in to 2021 or deepen them further if required.
COVID-Related Demand Destruction Caps Gains
An escalation of COVID-19 cases in the United States took center stage last week as new coronavirus infections in the U.S. and elsewhere hit record levels. Some areas are tightening restrictions to contain the spread, dampening the prospect of a near-term end to the global health crisis.
Additionally, the International Energy Agency (IEA) threw cold water on the vaccine news when it said on Thursday that global oil demand is unlikely to get a significant boost from the rollout of vaccines against COVID-19 until well into 2021.
US Government Reports Unexpected Crude Oil Rise, Private Report Shows Drawdown
U.S. crude oil inventories rose unexpectedly last week while gasoline and distillate stockpiles fell, the Energy information Administration (EIA) said on Thursday.
This week’s inventories reports also offset each other. Late Tuesday, the American Petroleum Institute’s (API) weekly inventories report showed a crude stockpile decline of 5.1 million barrels. But Thursday’s EIA report showed a bigger than expected increase in stockpiles, while traders were looking for a drawdown.
Libyan Production Rises While US Adds More Rigs
Libyan oil production has risen to 1.2 million barrels per day (bpd), a Libyan oil source told Reuters, up from the 1.0 million bpd reported on November 7 by the country’s National Oil Corp.
Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil rose by 10 to 236 this week. That followed increases in each of the last seven weeks. The total active U.S. rig count, meanwhile, was up 12 to 312, according to Baker Hughes.
Weekly Forecast
We see a sideways-to-lower trade as long as COVID-19 cases continue to rise and further lockdowns and restrictions remain imminent.
The vaccine news was bullish, but there are too many questions that need to be answered before it will have an impact on demand. Furthermore, experts are saying conditions are likely to get worse before they get better and that the crude oil market is unlikely to see any benefit from a COVID-19 vaccine for several months.
Additionally, The OPEC+ plan to postpone production cuts has been out for several weeks and have been absorbed into the markets.
For a look at all of today’s economic events, check out our economic calendar.
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November 15, 2020 at 10:24PM
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Oil Price Fundamental Weekly Forecast - Weighed Down as Vaccine Optimism Fades, Demand Destruction Lingers - FX Empire
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