The agency cautions that a vaccine breakthrough won’t quickly revive markets and fuel use won’t experience any “significant” boost from vaccines until 2H 2021 at least.

In its latest report on the oil market, the agency is also cutting its oil-demand projections for Q4 2020 by 1.2 mil bpd and says that unless the fundamentals change, the task of re-balancing will make slow progress.

Adding that if OPEC+ producers proceed with a scheduled increase of almost 2 mil bpd in January, then there will be a failure to deplete global oil inventories in Q1 2021.

The agency also notes that available data for Q3 now suggests that inventories only fell by barely a third of the expected amount, down by about 800k bpd.

The Abu Dhabi International Exhibition & Conference

Energy ministers from Saudi Arabia, Russia, Iraq, Iran, UAE along with OPEC’s Secretary General are all speaking. Corporates are represented also, BP and Total.

The agenda is available from this link. Some digging through the information will be required for specifics.

OPEC+ is in the midst of deciding the future of output cuts, although the pre-planned wind back of cuts from the new year does appear well and truly dead in the water given the renewed slide in demand.

Just under 30% of crude oil volumes from the US Gulf of Mexico remained offline as of  November 2:

The story on rigs is not so bad though:

Here is the link to the Platts piece for more.

The drop in oil yesterday was bad but things are looking worse from a technical perspective today, as we see price break below its 200-day MA (blue line) and now threatening a fall below its 8 September low @ $36.13.

Price is down another 4% after the sharp fall yesterday as the resurgence in virus cases across the globe is hampering the demand outlook, bringing back concerns regarding too much supply in the market as we look towards the year-end.

Tighter virus restrictions across Europe and particularly Germany and France only adds to the souring narrative, and the potential breakdown in the technical picture is exacerbating worries in the oil market over the past few days.

The greater-than-expected EIA inventory build yesterday, 4.3 mil barrels compared to estimates of 1.5 mil barrels, is also not helping with sentiment this week.

Looking at the technical picture, there is little in the way upon a break below $36 to the mid-June lows around $34.36-48 next. But beyond that, it is a slippery slope for oil with a potential fall towards $30 on the cards.

Looking ahead, the US election also presents added risks for the oil market next week. A Biden victory may spell a knee-jerk reaction lower considering his stance on wanting to ban fracking and amid virus jitters, it could exacerbate the downside potential.

That is something to expect in the near-term and unless OPEC+ is planning to step up its game going into its final meeting on 1 December, the risks are skewed to the downside for oil barring an upset where Trump steals the election again.

But if the latter does happen next week, I would expect virus jitters to continue to keep a lid on prices and fade any short-term reaction to the election result as such.

Hedge fund are reported to have purchased crude futures and options at the fastest rate for six months as portfolio managers grow in confidence that OPEC+ will delay their scheduled output increases until demand is stronger. Net position on crude has increased over the two most recent weeks to 464 million barrels rising from a low of 380 million on October 06. The net position is now in the 44th percentile for all weeks since the start of 2010 up from the 26th percentile on October 06.What’s the trigger for thisWell, it is rising COVID-19 cases hitting oil demand. Yesterday, OPEC’s chief said that rising infections may delay oil’s recovery. The funds are getting one step ahead expecting OPEC+ to delay cuts to support oil prices. As things currently stand OPEC+ is scheduled to increase production by almost 2 million barrels per day in January.When might they do this?The JMMC meeting is due November 17 and OPEC+ are due to meet in November 30/December 01. So, a buy in oil could make sense for some traders in the run up to the meeting. Certainly after the US elections, as the risk is that the USD takes a bull run on a surprise Trump victory. However, a Trump victory is the outlier result.

Reuters carried the info on Tuesday ICYMI, link here.

NPD citing the usual reasons: