Oil Prices Remain Steady
Oil prices remained steady on November 22, as investors weighed the impact of the coronavirus pandemic on global demand. Brent crude, the international benchmark, was trading at $45.63 a barrel, while West Texas Intermediate, the U.S. benchmark, was trading at $43.11 a barrel.
OPEC+ Meeting
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, held a meeting on November 21 to discuss the state of the oil market. The group agreed to maintain its current production levels, which are currently at 7.7 million barrels per day (bpd). The decision was made in order to prevent a further decline in oil prices.
Demand for Oil
The demand for oil has been hit hard by the coronavirus pandemic, as travel restrictions and lockdowns have reduced the need for fuel. The International Energy Agency (IEA) estimates that global oil demand will decline by 8.8 million bpd in 2020, the largest annual decline in history.
Oil Production Cuts
OPEC+ has implemented production cuts in order to balance the market and support prices. The group has cut production by 9.7 million bpd since May, and is expected to extend the cuts until the end of the year.
U.S. Oil Production
The United States is the world’s largest oil producer, and its production has been hit hard by the pandemic. U.S. oil production has declined by more than 2 million bpd since the start of the year, and is expected to decline further in the coming months.
U.S. Shale Industry
The U.S. shale industry has been particularly hard hit by the pandemic, as low oil prices have made it difficult for producers to remain profitable. Many producers have been forced to cut back on production, and some have even gone bankrupt.
Oil Demand Recovery
The IEA expects global oil demand to recover in 2021, as the rollout of vaccines and the easing of travel restrictions should lead to an increase in fuel consumption. However, the recovery is expected to be slow, and the IEA estimates that global oil demand will remain below pre-pandemic levels until at least 2024.
Oil Price Outlook
Oil prices are expected to remain volatile in the near term, as investors weigh the impact of the pandemic on global demand. However, the IEA expects prices to gradually recover in the coming years, as the global economy recovers and demand for oil increases.