Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Crude Oil Prices Correct Lower After Big Rally

Commodities Nov 26, 2020 09:04AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Geoffrey Smith 

Investing.com -- Oil prices retreated a little in light trading on Thursday, with volumes way down due to the U.S. Thanksgiving holiday, but crude was still holding on to almost all its gains in a rally that has seen it rise a spectacular $10 a barrel in the last month.

By 9:15 AM ET (1415 GMT), U.S. Crude futures were down 0.9% at $45.28 a barrel, while the international benchmark Brent was down 1.1% at $48.01 a barrel. 

However, that's up from a low of just over $35 for WTI as recently as late October.

The rally that has happened over the last month has had many drivers but the most important has been the announcement of three effective vaccines against Covid-19, encouraging hopes of a smart rebound in demand next year from the travel and industrial sectors.  At the same time, market belief has strengthened that the so-called OPEC+ group of producers will defer an increase of just under 2 million barrels a day in output when it reviews its policy for 2021 next Monday and Tuesday.

The market's base case is that the producers will keep production unchanged for another three months, allowing more time for historically high stocks to be whittled down by current demand.  Bassam Fatouh, an analyst with the Oxford Institute for Energy Studies, argued in a research note this week that, while all options are still possible for OPEC+, deeper cuts are unlikely because the higher prices they generate will encourage countries to pump above their quotas.

Moreover, deeper cuts may not be necessary, as demand is holding up surprisingly well. The economic slowdown from the second wave of the pandemic has had a much smaller effect on oil consumption than the in the spring during its first wave - as shown by U.S. crude inventories, which fell by over 750,000 barrels last week instead of rising as expected, according to U.S. government data released on Wednesday.

Analysis from consultancy Rystad Energy suggests that European oil demand, in turn, has fallen by less than 1 million b/d this time around.

“Road fuel demand held up much better than expected for two reasons," said Artyom Tchen, Senior Oil Markets Analyst at Rystad, in emailed comments. "Firstly, Europeans showed a lower degree of compliance this time compared to the strict enforcement of restrictions seen in April. Secondly, in an attempt to minimize the use of public transport, or to make up for a drop in bus and train services, people have elected to use their personal vehicles more often for commuting, thus lifting demand for road fuels by 2-3 percentage points depending on country.” 

Crude Oil Prices Correct Lower After Big Rally
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
New Jazenevd
New Jazenevd Nov 26, 2020 1:56PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
US oil consumption will return inevitably to pre- covid levels and grow more. It is impossible to live here without driving a car. On the other hand, US oil production may not recover pre-covid level because of oil and business unfriendly biden administration. It creates case for higher oil price in future.
Feng Miao
Feng Miao Nov 26, 2020 11:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I predict more personal car gas usage some time ago.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email