Oil Price Fundamental Daily Forecast – Bets Rising That OPEC+ Will Delay Output Increases

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Thursday after recovering from an early session setback and some profit-taking the previous session. The trade also looks a little tentative ahead of today’s government weekly inventories report.

Despite the cautious trade, the markets are still up more than 11% for the week on growing hopes that the world’s major producers will hold off on a planned supply increase as soaring cases of COVID-19 threaten the global demand recovery.

At 08:27 GMT, December WTI crude oil is at $41.66, up $0.21 or +0.51% and January Brent crude oil is at $43.99, up $0.19 or +0.43%.

Fuel Demand Under Pressure

Fuel demand is being pressured by rising infections in Europe, the United States and Latin America. As a result, OPEC has said demand will rebound more slowly in 2021 than previously thought.

Analysts at ANZ Research said the outlook for crude oil demand has darkened because of new pandemic restrictions which could push the market back into surplus in the fourth quarter.

OPEC+ Could Delay Planned Supply Increase

Algeria’s minister said on Wednesday that OPEC+ could extend current production cuts of 7.7 million barrels per day (bpd) into 2021, or deepen them further if needed.

The weakening outlook has piled pressure on OPEC+ to hold back a supply increase of 2 million bpd scheduled for January, with the market now pricing in a delay, analysts said.

Big Oil Execs Say They’re Not Worried About Biden’s Energy Plan

The prospect of a Joe Biden presidency and the most progressive climate strategy the U.S. has ever attempted is not something that should concern the energy industry, oil and gas executives told CNBC. Instead, they hope President-elect Biden will engage directly with them as he rolls out his energy plan.

Biden has previously said that one of his first acts as president would be to reverse President Trump’s decision to pull out of the Paris climate agreement. Thereafter, cutting carbon emissions will likely take center stage when it comes to the former vice president’s energy credibility.

Daily Forecast

The market is receiving support from hopes for a vaccine to fight the spread of COVID-19 and growing expectations that OPEC+ will extend or deepen its production cuts. The latter has to be done because the outlook for crude oil demand is getting bleaker because of the renewed pandemic restrictions which could lead to a supply glut by the fourth quarter.

I expect issues with the vaccine and a number of delays so OPEC+ will have no choice but to delay the output increases.

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