Disappointment with OPEC+ Decision Limits Earnings
WTI and Brent crude oil futures traded slightly lower at the end of Monday’s session. Particularly, after recovering most of their previous losses. January WTI Crude Oil futures are trading at $46.13, falling to $0.13 or -0.28%. February Brent Crude Oil futures are at $49.05, falling $0.20 or -0.41%.
Last week, after a long discussion, OPEC Plus members reached an agreement to maintain the level of an output cut at 7.2 million barrels. Member states decided that production would increase by 500,000 barrels in January. Also, the group would hold ministerial meetings in the coming months to determine output.
The weaknesses shown by the price dynamics could be indicating some disappointment with OPEC+ ‘s decision to commit to increasing the limits previously imposed on production. At first, both futures contracts jumped 2%. Especially, after learning that OPEC+ had decided to increase output from January but maintain the bulk of the cuts.
However, this news was left behind. In fact, trades are beginning to forcibly see a very complicated reality in the supply and demand scenario.
Iran invites companies worldwide to invest in the oil and gas industry
On Sunday, Iran’s state media said that the country’s leaders had instructed the minister of industry to prepare the oil production and sale facilities. So, in 3 months, they will be ready and can be operational at full capacity.
On the other hand, Covid-19 is still affecting the demand for black gold. The rebound in coronavirus cases worldwide has forced several countries to introduce new quarantines. Thus, highlighting the strict confinements in the state of California in the United States, in Germany, or South Korea.
Besides, gasoline consumption fell during the week. The Thanksgiving holiday hasn’t experienced such low levels of celebrations in more than 20 years. This was due to the negative effect of fuel consumption restrictions.
There may be some factors counteracting these events such as the report published by China showing that its exports increased in November at the fastest rate since February 2018. A solid demand drove growth globally. We must also bear in mind that it is the second economy largest in the world growing faster than its neighbors.
As for other news, Reuters published that the United States is preparing to impose sanctions on at least twelve Chinese officials for their role in Beijing’s decision to disqualify the opposition lawmakers elected in Hong Kong. It could be limiting the rise in oil prices and exerting downward pressure.
