Oil Starts Week Positively
Oil prices started the week positively on expectations that OPEC+ will keep output levels unchanged in February and as Chinese oil demand is recording a weather-related uptick.
That’s what Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in a statement sent to Rigzone on Monday. The Rystad Energy representative noted that most participants in yesterday’s OPEC+ JTC meeting seemed to be against an output increase from February, “creating expectations among traders that no more additional oil will flood the market amid the current weak demand”.
Under the current output terms, surpluses are expected from February until April before demand recovers from May onwards, according to Tonhaugen, who added that a cold-snap in China is increasing diesel demand as a back-up source for power generation, which he said is also supporting overall oil demand.
“Overall, a lot will depend on the OPEC+ meeting today,” Tonhaugen said in the statement sent to Rigzone.
“If the decision is to rise output from February, prices are bound to take a hit. At the moment though, expectations are for the opposite, with stable output lightly priced in. A confirmation that the group’s production will not rise will definitely strengthen the market sentiment and assist prices on their ascent,” he added.
“As usual, the group’s members may come up with reservations and concerns on either option, so price swings could happen during the day as leaks from the discussions start to emerge. A long-lasting meeting is always a sign that a unanimous decision is not very easy to reach, so traders will also keep an eye on their clocks today for a hint of what’s coming,” Tonhaugen went on to say.
The price of Brent crude oil topped $53 per barrel early Monday. Brent closed out 2020 at just under $52 per barrel.
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