Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Vladimir Zernov
WTI Crude Oil

Oil Video 19.11.20.


For Now, Traders Are Focused On Vaccine News Rather Than Surging Coronavirus

While stocks have lost plenty of ground in the last few hours of yesterday’s trading session and remain under some pressure today on worries about new anti-virus restrictions, oil managed to stay near $41.50.

At this point, it looks like oil traders are ready to take a long-term view of the market. There is a similar story going on in the precious metals market which is currently under pressure as recent vaccine news reduced demand for safe haven assets.

The key question for oil traders is whether the market will be able to tolerate additional bad news on the coronavirus front. The situation in Europe is stabilizing thanks to lockdowns although the number of new cases reported each day remains high.

At the same time, the situation in the U.S. is getting worse, and new restrictions are regularly introduced. In addition, consumers may voluntary decrease their movements due to virus fears. Today, United Airlines stated that it witnessed rising cancellations and falling bookings as consumers were anxious about the virus.

The recent gasoline demand data suggests that demand is on its way down as it declined from 8.76 million barrels per day (bpd) in the previous week to 8.26 million bpd. If demand remains soft, inventories will continue to increase, which will ultimately put pressure on the price of oil.

Potential Support From OPEC+ Provides Material Help To The Oil Market

At this point, it looks like the market has priced in a three-month extension of current produciton cuts from OPEC+ members.

The idea is that this extension will support the market through the challenging winter months while vaccines will be ready for mass deployment before the beginning of the next year’s driving season.

If this scenario is realized in practice, demand for oil will materially increase by next summer and push oil prices to new highs.

If OPEC+ countries fail to extend current production cuts and increase their production by 2 million bpd at the beginning of 2021, oil prices will collapse. Since everyone understands that failure to extend current production cuts will lead to a major sell-off, the probability of this scenario is minimal.

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

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.