An Opec+ panel sees weaker oil demand in 2021 as producers mull an oil cut extension
London — Oil prices edged up on Tuesday helped by expectations that oil cartel Opec and its allies, including Russia (Opec+) would tighten supplies next year, and supported by news of a second possible Covid-19 vaccine.
Brent crude rose 13c, or 0.3%, to $43.95 a barrel by 9.58am GMT and US West Texas Intermediate (WTI) crude was up 10c, or 0.2%, at $41.44 a barrel.
“Oil prices enjoyed modest gains this morning, as enthusiasm over a new, seemingly more efficient, vaccine has led a new price rally,” said Rystad Energy’s head of oil markets Bjørnar Tonhaugen. “Now all eyes are on possible leaks from today’s Opec+ technical meeting.”
Opec+ holds a ministerial committee meeting on Tuesday that could recommend changing quotas when all the ministers meet on November 30 and December 1.
Opec+ revised its scenarios for 2021 with demand seen weaker than previously anticipated, a confidential document seen by Reuters showed, a revision that supports the case for tightening supply policy next year.
Brent and WTI have risen more than 10% in the past six days after Pfizer said its Covid-19 vaccine was more than 90% effective. Prices had a further boost this week when Moderna said its vaccine was 94.5% effective.
“Developments with regards to a vaccine are constructive for oil demand in the medium to long term. However, for the near term it changes little, with plenty of concern over the demand impact from the latest wave of Covid-19,” said ING commodity strategists Warren Patterson.
Oil prices remain under pressure as many Western governments have imposed new lockdowns due to a second wave of the virus.
But China’s crude oil throughput in October rose to its highest level, underpinning a fast demand recovery.
“Oil demand in China is exceeding pre-coronavirus levels, which suggests oil demand is not permanently impaired,” analysts from Bernstein Energy said, saying this supports data indicating “oil demand has not been structurally damaged” by the pandemic.