One new concern for OPEC+ is the change in the balance of risks to oil demand due to the surge in global coronavirus cases.
U.S. West Texas and international-benchmark Brent crude oil futures are trading lower on Monday after giving up earlier gains. Prices surged earlier in the session on expectations that OPEC and its allies may cap output at current levels in February at a video summit later in the day as the coronavirus pandemic keeps worries about first half demand elevated.
At 13:05 GMT, February WTI crude oil is trading $48.34, down $0.18 or -0.37% and March Brent crude oil is at $51.80, unchanged for the session.
Oil Prices Touch Multi-Month Highs as OPEC+ Expected to Cap Output …
Oil prices touched multi-month highs on Monday on expectations that OPEC and its allied producers may cap production at current level in February and on hopes that vaccines may curb the spread of the novel coronavirus and drive an economic rebound.
OPEC and its allies, a group known as OPEC+, will meet later today. Most OPEC+ officials voiced opposition to increasing oil output from February when they met on Sunday, three OPEC+ sources told Reuters on Monday.
In December, OPEC+ decided to increase production by 0.5 million barrels per day (bpd) from January as part of a 2 million bpd gradual rise this year, but some members have questioned the need to release more oil because of an upsurge in the COVID-19 pandemic.
But Lose Ground as COVID-19 Worries Weigh on Demand Outlook
Mohammad Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), said on Sunday that while crude demand is expected to rise by 5.9 million barrels per day (bpd) to 95.9 million bpd this year, the group see plenty of downside demand risks in the first half of 2021.
“We are only beginning to emerge from a year of deep investment cuts, huge job losses and the worst crude oil demand destruction on record,” he said.
We’re looking at heightened volatility at the start of the new year due to disagreements within the OPEC+ group. One new concern is the change in the balance of risks to oil demand due to the surge in global coronavirus cases.
Analysts from Energy Aspects and RBC Capital said OPEC+ was likely to maintain January production levels in February.
“We think the producer group will opt to forgo any further production increases for February with COVID-19 cases continuing to climb and the slower-than-expected vaccine rollout,” RBC Capital’s Helima Croft said.
For a look at all of today’s economic events, check out our economic calendar.