Oil Price Fundamental Daily Forecast – Light Profit-Taking Ahead of Weekend

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Friday as investors lighten up on the long side ahead of the weekend and next week’s holiday shortened week.

After posting solid gains this week on optimism over the rollout of the coronavirus vaccines and hopes for a new fiscal stimulus deal, traders are coming back to reality with soaring COVID-19 cases seen as a threat to near-term fuel demand and a strengthening of the U.S. Dollar also having a negative impact.

At 10:52 GMT, February WTI crude oil is trading $48.39, down $0.15 or -0.31% and February Brent crude oil is at $51.29, down $0.21 or -0.41%.

COVID-19 Impact

More than 73.65 million people have been reported to be infected by the coronavirus globally and 1,654,920 have died, according to a Reuters tally on Friday.

The spike in cases is leading to tough restrictions on travel, impacting fuel demand and any economic recovery.

ANZ Research said with U.S. COVID-19 infections hitting new daily records, and restrictions tightening in Japan, pressure is growing on the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies, together called OPEC+.

OPEC+ plans to add 500,000 barrels per day of supply in January, in a first step toward a 2 million bpd target.

Daily Forecast

This week’s price action suggests that all of the good news regarding the vaccines and stimulus have been fully-priced into the market, which usually means it’s probably time for some traders to take some profits off the table. That could be what’s going on today.

A short-term pullback into a value area would be acceptable and quite normal. We’re not anticipating a change in trend, but conditions could change if the hedge funds decide to trim their long positions more than expected.

Additionally, comments from OPEC+ members could be the source of volatility as they continue to assess the supply/demand situation in the wake of rising prices and surging COVID-19 cases.

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