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In spite of the Organization of Petroleum Exporting Countries (OPEC) reaching a widely anticipated broad consensus on the need to extend their oil production cuts, crude prices fell on Monday; however, they still enjoyed more than one 25 percent on its biggest monthly increase since May, in hopes that Covid-19 vaccines will soon be available.
Brent crude stabilized for January delivery 59 cents to $ 47.59 per barrel, while the more actively traded February Brent contract fell 37 cents to $ 47.88; West Texas Intermediate crude for January delivery settled at $ 45.34 per barrel, down 19 cents.
Abdelmadjid Attar, minister of energy for Algeria and current OPEC president, said there was “consensus at the OPEC level” to extend the current supply cuts of 7.7 million barrels per day (bpd) for another three months; talks will continue on Tuesday.
John Kilduff, founding partner in Again Capital, he expressed the reservations of his colleagues when remarking: “Many of these statements are taken with a grain of salt; he would have liked to have heard them from the Saudis or from a bigger player on stage than just the Algerians.”
Hussein Sayed, analyst at FXTM, noted that demand has recovered in Asia but no Europe and the US, which presents OPEC with a “difficult choice on whether to delay or bring in more oil.”
Meanwhile, since the announcement of three vaccine advancements several weeks ago, fears of rising rates of Covid infection appear to have lessened somewhat, and Goldman sachs said that a sudden increase in cases would not prevent the rebalancing of the oil market as a result of the progress of the vaccine; predicted that Brent will rise to $ 65 in 2021.
Capital economy see brent in $ 60 next year due to vaccinations, and Ron smith, oil and gas analyst at BCS Global Markets, believes there are reasons to be optimistic about prices, especially on a six-month perspective.
But nevertheless, BCS Global MarketsWhile optimistic, he warned there is a substantial supply waiting on the wings of OPEC + and “hyperdynamic US shale producers eager to drill again …….[rig activity] was rising steadily this fall, even before oil began its most recent rally, and we believe that as oil prices $ 50 per barrel, a key inflection point can be crossed, accelerating US oil drilling activity and, with a slight delay, oil production. “
The only country relatively unaffected by any of this is China, which continues its economic recovery from lockdown-induced collapse: Bloomberg noted that along with robust manufacturing data, at least one fuel supplier is bracing for an expected increase in air travel ahead of the Lunar New Year holidays in February .
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