Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Crude Oil Drifts Higher on Hopes for OPEC+ Discipline

Published 11/20/2020, 11:39 AM
Updated 11/20/2020, 11:41 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- Crude oil prices rose modestly on Friday, as the market again looked through short-term developments on the Covid-19 front to focus on the prospect of a recovery in demand next year.

Fears that the latest wave of the pandemic will lead to broader lockdowns and fresh demand destruction played second fiddle to hopes that the availability of vaccines next year will allow economic life to return to normal.

By 11:40 AM ET (1640 GMT), U.S. crude futures were up less than 0.1% at $41.94 a barrel, while the international marker Brent was up 0.5% at $44.42 a barrel.

U.S. RBOB gasoline futures were up 1.0% at $1.1745 a gallon, close to their high point for the week.

Brent was outperforming West Texas Intermediate partly on the back of a report by Bloomberg pointing out that levels of crude storage at the national hub of Cushing Oklahoma had once again risen above 80%, the level where they typically exert downward pressure on prices.

Cushing crude stocks have risen in 15 out of the last 20 weeks, and such weekly declines as there have been appear small next to the builds in other weeks. Last week’s build of 1.2 million barrels, while smaller than expected, was the biggest in five weeks.

Stockpiles tend to rise as fuel demand weakens, a factor that’s likely to be in evidence next week. The Center for Disease Control advised Americans not to travel for the Thanksgiving holiday, to avoid spreading the virus faster. If that warning is heeded, it will hit what is usually a peak week for U.S. fuel demand. Also weighing will be the new seven-hour curfew in California, the state that consumes more oil than any other in the U.S.

On the plus side, traders appear increasingly confident that the OPEC+ bloc will postpone its scheduled output increase when it meets in 10 days’ time – even though a monitoring committee meeting this week gave no formal recommendation on output policy.

The bloc will have to accommodate volumes of oil from OPEC member Libya that are still rising in the wake of an October ceasefire in its civil war.

“Libya, which is exempt from (production) cuts (under the OPEC+ deal), is coming back with a vengeance,” kpler analyst Homayoun Falakshahi said via Twitter. “The current production ramp-up suggests exports could pass the 1 (million barrels a day) threshold by December and reach the 2019-average of 1.1 mbd fairly rapidly.”

Latest comments

OPEC+: Free oil for ALL ?? (How to - trash Earth.)
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.