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Oil Is Gaining Ground On Hopes That OPEC+ Will Extend Current Production Cuts

By:
Vladimir Zernov
Published: Nov 3, 2020, 16:30 GMT+00:00

Oil gained strong upside momentum and is trying to settle above the $38 level.

WTI Crude Oil

Oil Video 03.11.20.

Russia Discussed The Extension Of Current Production Cuts With The Country’s Oil Companies

Oil continues its rebound after reports indicated that Russian Minister of Energy Alexander Novak discussed the extension of current oil production cuts with the country’s oil companies.

At this point, OPEC+ countries have no choice but to extend current production cuts as the second wave of lockdowns in Europe put significant pressure on demand for oil.

If OPEC+ increases its oil production by 2 million barrels per day (bpd) at the beginning of 2021 as was originally planned, the market will quickly become oversupplied and inventories will go through the roof.

At the same time, some OPEC+ members (for example, Iraq) would like to increase their oil production to boost revenues as their budgets are hit hard by the pandemic.

In this situation, any news that point to the potential extension of current production cuts provide significant support to the oil market.

Most likely, Saudi Arabia and Russia will agree to keep current production levels for the first three months of 2021, and other OPEC+ members will have to comply with the new deal or face attacks on their market share from the leaders of OPEC+.

Libya’s Oil Production Increases To 800,000 Bpd

Libya continues to defy skeptics who believed that the truce between the country’s factions won’t last long. The situation in the country is stable and its oil production continues to increase at a very healthy pace.

The recent reports indicated that Libya has already managed to boost its production to 800,000 bpd. Currently, the country is clearly on the way to reach production of 1 million bpd by the end of the year.

The rising exports from Libya are a major headache for oil bulls as they come at a time when demand is under pressure due to lockdowns in Europe.

In addition to conserns about the rising oil production in Libya, the oil market will certainly pay attention to the results of U.S. presidential election. Today, most markets are in a good mood, but the situation may change quickly in case of a contested election.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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