By Geoffrey Smith
Investing.com -- Crude oil prices rose on Monday after the world’s two biggest oil exporters both dropped hints that they may need to abandon, or at least delay, the increase in production that they expect to carry out at the start of 2021.
In opening remarks to a meeting of ministers from the Organization of Petroleum Exporting Countries and its biggest allies, Russian Energy Minister Alexander Novak and his Saudi Arabian counterpart Prince Abdulaziz bin Salman both warned of an uncertain period ahead and stressed the need for the group’s output policy to remain flexible in its efforts to support prices.
By 11 AM ET (1500 GMT), U.S. crude futures had reversed overnight losses to trade up 0.4% at $41.28 a barrel, while the international benchmark Brent was up 0.1% at $42.95 a barrel. Both markers were well off their intraday highs, nevertheless.
U.S. gasoline futures were up 0.2% at $1.1711 a gallon, having hit a two-week low overnight..
Russia’s Novak had warned in his remarks at the ‘open’ session of the meeting that the situation remained fragile and that the recovery in oil demand had slowed down since the summer. That’s due largely to the resurgence of the Covid-19 pandemic in most of the northern hemisphere – outside China – as colder temperatures and the start of the academic year have combined to spread the virus again. Hospital admissions in both North America and Europe have been on the increase for over a month now.
Even China’s rebound has flattened out somewhat, with third-quarter GDP numbers overnight disappointing both in a quarter-on-quarter and year-on-year comparison, although the country remains on track to be the only major economy in the world that won’t shrink this year.
For his part, Prince Abdulaziz warned that the bloc had to be ready to act pre-emptively to head off a repeat of the second-quarter chaos, when a plunge in demand briefly turned futures prices negative for the first time ever.
“We have to be able to take measures to head off negative trends and developments, to nip them in the bud, before they become threatening,” Abdulaziz said. “Nobody in the market should be in any doubt as to our commitment and our intent. It would be unwise indeed if anyone were to gamble on our determination.”
Abdulaziz had made similar comments at an earlier meeting this year in the direction of those tempted to sell the market short.