The price of a barrel of WTI oil reached its highest level since the end of August, at some point exceeding 43 USD. Also in this market, optimism about a possible return to economic normality in spring 2021 appeared.
In addition to the information about the COVID-19 vaccine, the oil market seems to be supported by OPEC+'s flexible policy and the messages coming from this organization. OPEC+ may decide to postpone the deadline for lifting current production limits beyond the beginning of next year. The Algerian Energy Minister said on Wednesday, November 11th that OPEC+ may extend the current production reduction of 7.7 million barrels until 2021. It may also cut production even further if necessary.
The IEA said in its monthly report that by 2021, demand for oil is unlikely to increase significantly after the introduction of the COVID-19 vaccine and revised its fuel demand forecast for 2020 by 400,000 barrels of oil. In turn, the Wall Street Journal reported that OPEC has deepened its forecast of falling global oil demand in 2020 by 300,000 barrels per day to 9.8 million, a 10% decline from 2019. The cartel also eased its forecast of demand growth in 2021 by 300,000 barrels.
Mixed sentiment prevails in the American stock market. The amount and timing of the new fiscal package is still unknown, and the scale of the epidemic increases concerns about new restrictions in the US. New York governor Andrew Cuomo imposed a new package of restrictions already on Wednesday, as the number of COVID-19 infections began to rise sharply with the need for hospitalization. Concerns about hospital capacity are beginning to emerge in the United States.
Futures indicate that the US S&P 500 and Dow Jones Industrial Average indices a potential decline and that the Nasdaq 100 index could likely rise.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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