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Oil – OPEC+ has delayed its meeting to decide on output cuts until Thursday

  
Analysis, Crude

The OPEC oil cartel and its partners (which mainly means Russia) has deferred a decision on planned production hikes, or an extension of curbs, until December 3.

  • The delay is said to give ministers more time to reach a deal. Talks will continue via phone.
  • The meeting on Monday broke without an agreement.
Discussions centre on whether to increase production in January as planned or maintain the cuts. Main considerations (in summary):
some see the market as still too fragile to accept more oil output
others are keen to ramp up production and make the most of the until now better prices.
oil putin

Heads up for oil traders – OPEC + meeting Monday, output cut extension on the agenda

  
Analysis, Crude

The OPEC+ oil cartel will meet on Monday 30 November 2020 after a weekend ministerial meeting revealed a split on the production level question for 2021.

Will the producers’ group will extend large output cuts?
  • The current plan is to raise output by 2 million barrels /day in January but the expectation amongst analysts is that will be put on hold due to the demand decline prompted by renewed movement restrictions in the face of new &/or sustained increases in virus cases.
  • An initial round of talks was held on Sunday, but no agreement was reached.
ANZ:
  • “Signs of disunity in OPEC raised the prospect of the group not agreeing to an extension of current production cuts”
  • “Some members, including UAE and Iraq, have expressed misgivings about ” supply policy.
The OPEC+ oil cartel will meet on Monday 30 November 2020 after a weekend ministerial meeting revealed a split on the production level question for 2021.

Saudi, Russia energy ministers to hold informal talks with OPEC+ JMMC tomorrow – report

  
Analysis, Crude

TASS reports on the matter

In saying that the informal OPEC+ consultations will be held tomorrow on 28 November.
This is usually done to get a feel of the mood music in the room and also to try and feel out what the two big heads i.e. Saudi and Russia are going to want ahead of the ministerial meetings next week on 30 November and 1 December.
 
The market is largely expecting an extension of the output cuts by three months but tensions surrounding the deal itself and the future of the bloc (UAE is reported to want to quit) is making for some nervousness as we look towards the week ahead.

US weekly oil inventories -754K vs +225K expected

  
Analysis, Crude

Weekly oil inventory data from the EIA

  • Prior was +769K
  • Gasoline +2180K vs +1150K exp
  • Distillates -1441K vs -2250K
  • Refinery utilization +1.3% vs +0.7% exp
API numbers from late yesterday:
  • Crude +3800K
  • Gasoline +1300K
  • Distillates -1800K
  • Cushing -1400K
This is a larger surprise than it appears because there was some oil selling on the API report. The build in gasoline takes the shine off it and distilltes are also negative so the market isn’t doing much. If anything, crude has ticked slightly lower since the headlines.
WTI oil chart

IEA’s Birol: We do not see a structural decline in oil demand

  
Analysis, Crude

Says China oil demand this year will even be slightly higher than 2019

The good news for oil traders is that the latest bout of lockdown fear didn’t lead to any massive decline in prices as key support held up. But amid the risk rally, oil is also feeding off the positive spillovers to climb to its highest levels since March:
Oil W1 25-11
The 100-week moving average @ $48.42 is the next key technical target.

Russia says too early to comment on its position in OPEC+ talks

  
Analysis, Crude

Says Putin has no plans yet to talk to Saudi Arabia on OPEC+ deal

OPEC
You can always count on OPEC+ to leave things until the last minute and try and piece everything together on the day when they meet.
There’s going to be a few technical meetings this week between members to get a feel on what the mood music is, before we proceed to the ministerial meetings on 30 November and 1 December next week.
 
For now though, oil is in a good spot as it has been riding on vaccine optimism as well in the past two weeks with WTI crude up another 1% today to $43.50.

Barclays 2021 oil price forecasts for Brent, WTI ($53 and $50 /bbl respectively)

  
Analysis, Crude

Barclays looking at the roll-out of vaccines as a turning point to boost demand

  • could lead to a sustainable recovery for the economy
The note also adds, on the supply side, that the Bank expects OPEC+ to delay the increase in of production targets by three months.
(OPEC meet later in November, the 30th and also on December 1)
Barclays info via Reuters
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