Crude oil prices drifted lower at the last trading session for the week. The drop is coming amidst a spike in COVID-19 cases across emerged markets which continues to weigh down on oil traders, as it is believed that the virus has curbed demand in two of the world’s biggest crude oil consuming areas.
OPEC+ plans to reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January, as OPEC Secretary-General Mohammed Barkindo admits that fuel demand is looking “anemic.”
Brent crude futures (LCOc1) lost about 0.9%, to trade at $42.73 a barrel at the time this report was drafted, while U.S. West Texas Intermediate (WTI) crude futures lost 0.9%, to trade at $40.58 a barrel.
However, with their prevailing price levels, both major crude oil benchmarks are heading for small gains this week.
A technical committee of the OPEC+ ended a meeting yesterday expressing their fears over rising oil supply, as reduced human mobility aimed at limiting the spread of COVID-19 has also curbed fuel usage.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, in an explanatory note to Nairametrics, gave his outlook for the fragile oil market.
“There is a high probability of a supportive decision from the OPEC+ meeting at the end of November if the demand outlook remains cloudy, especially with COVID-19 spreading rampantly across Europe and with flashpoints igniting in other parts of the world.
“With COVID-19 fears ravishing the world, I am unsure if an OPEC extension of current quotas will still be considered the magic bullet for the oil price recovery.
“That said, a recovery in risk markets like stocks on ongoing stimulus deal might also echo in oil markets.”
