Short-Term Crude Oil Futures Rise by 50 Cents

  • The fundamentals of the current oil market are undoubtedly worrying.
  • According to the production reduction agreement, OPEC+ will increase its output by 2 million barrels per day starting from January next year.
  • The demand side is even worse.

Before the U.S. market opened on Monday, Russian Energy Minister Alexander Novak had a conversation with oil companies about OPEC+ production cuts which may be postponed. WTI crude oil futures rose by $0.50 in the short-term, and Brent crude oil futures rose by $0.40 in the short-term.

Oil gallons

Oil futures turned up, having fallen more than 5% before. The fundamentals of the current oil market are undoubtedly worrying. Oil prices recorded their biggest monthly decline since March in October.

FX Empire analyst Adesina Olumide said bluntly that bears have ruled the oil market. The CFTC report shows that as of the week of October 27, New York crude oil speculative net long positions decreased by 18,258 contracts, of which short positions increased by 13,339 contracts, indicating that investors are very bearish on crude oil.

When both supply and demand are in urgency, Russia’s willingness to stand up and actively discuss the delay of reducing the scale of production reduction is undoubtedly a shot in the arm to the oil market.

According to the production reduction agreement, OPEC+ will increase its output by 2 million barrels per day, starting from January next year, which will undoubtedly increase pressure on the oil market.

Previously, the oil market had an expectation that at the OPEC+ Joint Ministerial Supervisory Committee (JMMC) meeting, held on October 19, the postponement of reducing the scale of production reduction was high.

At that time, Libya resumed production and the oil market poured in $119,560.02 in barrels per day output. But Saudi Arabia and Russia only emphasized the uncertainty of the oil market at the meeting, which disappointed the market. Libyan National Petroleum Corporation Chairman Mustafa Sanara said over the weekend that the country’s goal is to reach 1.3 million barrels per day by early 2021.

In addition to the recovery of shale oil production in the United States, the total number of oil rigs in the United States in the week to October 30 was 221, an increase of 10 from the previous value, the largest increase in three months. The United States also, for the seventh consecutive week, increased oil and gas rigs. The supply side is indeed not optimistic.

Crude oil gallons

WTI Crude Oil Fell Below $34 Monday

Looking at the demand side, the epidemic situation in Europe and the United States is severe, and the second European lockdown is officially struck. The demand side is even worse.

Last week, Germany and France both announced that they would implement a nationwide “cities lockdown” one month later. British Prime Minister Boris Johnson also announced a new nationwide lockdown over the weekend.

Prime Minister Johnson said that the British government will extend the expensive coronavirus wage subsidy for one month to ensure that temporarily unemployed workers can get 80% of their wages. However, the Confederation of British Industry warned the second lockdown will be “really destructive” for the UK.

With many negatives, Russia’s statement today may not only bring tangible supply-side benefits, but also signal that it will not let the oil market ignore it. Oil prices have been boosted as a result.

Brent crude oil is currently down by more than 40% from the beginning of the year, and the Russian ruble has also suffered greatly. The ruble has fallen 23% against the dollar this year.

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Benedict Kasigara

I have been working as a freelance editor/writer since 2006. My specialist subject is film and television having worked for over 10 years from 2005 during which time I was the editor of the BFI Film and Television.

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