20 Nov 2020
There was little change to oil prices on Friday, remaining on track for a third consecutive weekly rise.
However, demand worries due to rising coronavirus infections and fresh lockdown restrictions in numerous countries capped gains.
Hopes of an effective Covid-19 vaccine and OPEC+ keeping production in check have boosted oil markets over the week.
Reuters reports Brent crude futures rose 2 cents, or 0.05% at $44.22 a barrel, whilst the U.S. West Texas Intermediate (WTI) January crude contract dropped 4 cents to $41.86 a barrel.
The WTI contract for December, which expires on Friday, declined 3 cents at $41.71 per barrel.
Jeffrey Halley, senior market analyst at OANDA stated: “Both contracts continue to consolidate at the upper end of their November ranges. However, momentum has notably waned, and both are vulnerable to negative headline surprises now.”
So far this week, both benchmarks rose over 3%, the smallest weekly gains in the past three weeks.
Oil markets have reduced weekly gains “as virus surge throws a wet blanket over vaccine optimism,” said Stephen Innes, chief global market strategist at Axi.
“But it is all down to OPEC,” he went on to add.
OPEC+ has a meeting scheduled on 30 November and 1 December to discuss output policy.
“The next few sessions are going to be choppy. The good news is that there seems to be hope of containing the disease,” according to Sukrit Vijayakar, director of energy consultancy Trifecta.
He added that the market needs to see a reduced number of daily Covid cases, a fall in the number of active cases and increased growth in demand for oil products.
Furthermore, oil prices were bolstered by indications of progress on a stimulus deal in Washington as U.S. Senate Republican Majority Leader Mitch McConnell agreed to restart talks on issuing more Covid relief as the number of cases skyrocket across the country.
That said, there are still oversupply fears, as Libya increases production to 1.25 million barrels per day.