Oil prices extended its upside at Monday’s trading session. Oil traders are riding bullish on the macro that Organization of the Petroleum Exporting Countries (OPEC), Russia, and other producers – a group known as OPEC+, will support oil prices amid the COVID-19 viral attacks going on at unprecedented levels.
- At the time of drafting this report, Brent crude futures gained 0.4% to $45.14 a barrel
- U.S oil-based derivative, U.S. West Texas Intermediate crude, gained 0.2% to $42.52 a barrel.
- Both major oil benchmarks gained 5% last week.
What they are saying
Top expert, Stephen Innes, in a note to Nairametrics, gave key fundamentals, driving the bullish trend prevailing at the world’s black fossil market,
“The enthusiasm to buy risk-on positive vaccine headlines last week has somewhat tampered with the limited good news this week (improved Pfizer efficacy, Moderna efficacy, AstraZeneca positive signs for immune response in elderly). With Europe at the peak of the second wave of infections, investors are reassessing the European reallocation story and the short USD story.
“Oil ended the week up 5%. The oil market is pricing a return to normalcy from the middle of 2021. Indeed this is visible in the time spreads tightening further. The WTI Dec21/Jan22 spread traded in backwardation today, a clear move in tightly supplied markets.”
What this means
Oil traders hoping on OPEC+ meeting scheduled to hold in some days time could see the organisation extend current cuts by 3-6 months.
Oil traders expect that OPEC+ meeting on November 30 and December 1, is at delaying the tapering of their 7.7 million barrels per day (bpd) cuts by around 2 million barrels per day from January 2021.