Opec to extend oil cuts by three months
- by Emilio Sims
- in Money
- — Dec 2, 2020
Brent crude for January delivery settled down 59 cents at $47.59 per barrel, while the more actively traded February Brent contract was down 37 cents at $47.88; West Texas Intermediate crude for January delivery settled at $45.34 per barrel, down 19 cents.
Talks will continue by phone, according to Bloomberg.
OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other allies, delayed talks on output policy for next year until Thursday, sources told Reuters, as important players had not reached consensus.
OPEC ministers met on Monday and had been scheduled to talk to their non-OPEC partners on Tuesday.
Although an accelerating COVID-19 vaccine race has raised hopes for a quicker economic rebound, analysts said a resultant fillip to demand may only materialise in the second half of 2021. It is also planning a new regional price benchmark based around its Murban crude variety, but the big liquid market needed for a successful launch is inhibited by the strictures of the cartel.
"Nonetheless this latest fracas does not bode well for collective cohesion in 2021 as vaccine optimism abounds and producers anticipate a strong recovery", RBC said.
Oil prices fell only slightly on Tuesday, giving little indication that traders were anticipating an OPEC+ breakdown on the scale of what occurred in March, when failure to reach a deal resulted in a monthlong price war between Saudi Arabia and Russian Federation. They also put off from Tuesday to Thursday a meeting with non-OPEC oil producers like Russian Federation, who have been co-ordinating their actions with the cartel in recent years to increase their influence. The run-up to the meeting saw new cracks emerge in the relationship between the United Arab Emirates - a core part of the group - and other members.
The discussions centre on whether to increase production in January as planned or maintain the cuts that spurred on the recent market rally in oil prices.
The rising production from Libya, which is exempt from the production cut deal due to the civil war, is another worrisome development for many OPEC+ members who do not want to lose their market share.
The poll of 40 economists and analysts forecast Brent would average $49.35 a barrel next year, little changed from last month's $49.76 outlook.
