Oil rally fades as COVID spikes crush hopes for vaccine quick fix

Oil rally fades as COVID spikes crush hopes for vaccine quick fix

 

On Tuesday, Oil prices were little changed as spiralling COVID-19 infections and the arrival of lockdowns; and limitations in Europe and the United States obscured Monday’s immunization fuelled rally in rough costs.

 

Unrefined slipped to underneath $44 a barrel with worldwide benchmark Brent for January conveyance losing seven pennies to settle at $43.75 a barrel.

 

US West Texas Intermediate for December conveyance increased nine pennies to settle at $41.43 a barrel.

 

The Organization of the Petroleum Exporting Countries (OPEC) and

its partners drove by Russia held an ecclesiastical advisory group meeting on Tuesday however made no conventional suggestion

on changing standards for one year from now.

 

The gathering, known as OPEC+, consented to record oil cuts not long ago as the pandemic gutted worldwide unrefined interest; causing oil costs to crash in March and April.

 

Saudi Arabia, OPEC’s boss and the world’s top exporter of oil, encouraged other oil-creating countries to consider deferring a lift to yield by 2,000,000 barrels for every day (bpd); or 2 percent of worldwide interest, in January.

 

 

ALSO READ: Pfizer launches Covid-19 vaccine delivery trial in four US states

 

 

 

OPEC+ is currently in agreement to cut 7.7 million bpd until January and then taper the reduction to 5.7 million bpd.

 

Its ministerial meeting is scheduled for November 30.

 

“Keeping the status quo would mean a very rocky start to 2021;” Louise Dickson, Analyst at Rystad Energy, told Al Jazeera.

 

Dickson added that extending existing cuts of 7.7 million bpd for a further three months would balance the market; but do very little to lift prices. And while a six-month extension is likely to support prices, there’s a sting in a tail.

 

“That’s a double-edged sword because if prices improve; then other players will bring back supply,” said Dickson.

 

Oil-producing nations are in the throes of a budget squeeze, including Saudi Arabia, which the IMF reckoned needs crude to fetch north of $78 a barrel to balance its budget this year; and just shy of $68 a barrel next year.

 

“We as a group do not want to give the markets any excuse to react negatively;” Saudi Energy Minister Prince Abdulaziz bin Salman reportedly said at the start of Tuesday’s OPEC+ meeting.

 

Russia has been slow to say whether it will agree to extend cuts. While Moscow has indicated that it will oblige to its commitment under the current OPEC+ deal; it has also said that the market has reached stability.

 

 

Oil prices hit a 10-week high on Monday after Moderna said preliminary trial data of its COVID-19 vaccine showed it to be 94.5 percent effective. It was the second dose of positive vaccine news in as many weeks, following promising trial results from Pfizer and BioNTech’s COVID-19 vaccine.

 

 

But analysts warned that good vaccine news today does not mean demand recovery tomorrow, next week or even next month.

 

 

 

 

 

“We still got a way to go and the Saudis recognise that,” Samantha Gross, energy and climate fellow at the Brookings Institution, told Al Jazeera.

 

“The vaccine news is good but we’re seeing a resurgence in the [United] States and in Europe; and that says to us that demand is not coming back quickly. Prices may bounce a little on vaccine news but they will go back down when people realise that it will not fix the problem immediately.”

About The Author

Osigweh Lilian Oluchi is a graduate of the University of Lagos where she obtained a B.A (Hons) in English, Masters in Public and International affairs (MPIA). Currently works with 1stnews as a Database Manager / Writer. [email protected]

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