Crude oil prices have slipped by 2% as investors await a decision by oil-producing group OPEC+ whether it would extend large output cuts to balance oil prices in the global markets.
However, hopes on a Covid-19 vaccine helped keep both the Brent and the WTI benchmarks on track to increase over a fifth in November.
Brent crude futures slipped $1.01 to $47.17 a barrel, while the US West Texas Intermediate (WTI) crude futures fell $0.86 to reach $44.67 a barrel, Reuters reported.
Analysts and traders also expect the Organization of the Petroleum Exporting Countries (OPEC), and allies, including Russia, together known as OPEC+, to postpone next year’s planned increase in oil supply to support prices amid a second wave of the virus.
Four OPEC+ sources told Reuters that the group held an initial round of discussions on 29 November, but did not reach any consensus on output policy for 2021 ahead of key meetings on 30 November and 1 December.
Goldman Sachs analysts stated: “While we base-case a three-month delay to prevent a return to a global oil surplus through 1Q21, not all producers appear on board.”
The winter wave of Covid-19 infections is expected to dent global fuel demand by 3Mbpd, the analysts said. This would ‘only partially be balanced by heating and restocking demand’ in Asia.
If the OPEC+ denies extending cuts, ANZ estimated that the oil market surplus could run to records highs of 1.5Mbpd to 3Mbp in the first half of next year.
Meanwhile, the world’s second-largest economy China expanded factory activity at a faster pace in more than three years in November. It is on track to be the first major economy to fully recover from the impact of the Covid-19 crisis.