Oil Prices Remain Steady
Oil prices remained steady on Tuesday, November 10th, as investors weighed the potential for a global economic recovery against the risk of a resurgence in coronavirus cases. Brent crude, the international benchmark, was trading at $44.25 a barrel, while West Texas Intermediate, the U.S. benchmark, was trading at $41.50 a barrel.
OPEC+ Meeting
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are scheduled to meet on Thursday, November 12th, to discuss the state of the oil market. The group is expected to discuss the possibility of extending production cuts beyond the end of the year.
OPEC+ has been cutting production since May in an effort to support prices. The group has agreed to reduce output by 7.7 million barrels per day, or about 8% of global supply. The cuts are set to expire at the end of the year, and OPEC+ is expected to decide whether to extend them into 2021.
Demand Outlook
The demand outlook for oil remains uncertain as the coronavirus pandemic continues to spread. The International Energy Agency recently warned that global oil demand could fall by 8.8 million barrels per day in 2020, the largest decline since the Great Depression.
At the same time, the IEA said that demand could rebound by 5.7 million barrels per day in 2021 if the pandemic is brought under control. However, the agency warned that the recovery could be slower if the virus continues to spread.
U.S. Production
U.S. oil production has been declining since the start of the pandemic, as low prices have forced many producers to cut back on drilling and production. The Energy Information Administration recently reported that U.S. production fell to 11.1 million barrels per day in October, down from a peak of 13.1 million barrels per day in March.
The EIA also said that U.S. production could fall to 10.7 million barrels per day in 2021, the lowest level since 2017. The agency said that the decline could be even steeper if OPEC+ extends its production cuts.
Oil Market Volatility
Oil prices have been volatile in recent weeks, as investors weigh the potential for a global economic recovery against the risk of a resurgence in coronavirus cases. Prices have been supported by hopes that a vaccine could be approved soon, but have been weighed down by concerns that the pandemic could worsen in the coming months.
The oil market is also being affected by the ongoing U.S. presidential election. The outcome of the election could have a significant impact on oil prices, as the policies of the incoming administration could affect the demand outlook for oil.
Outlook
The outlook for the oil market remains uncertain, as investors weigh the potential for a global economic recovery against the risk of a resurgence in coronavirus cases. The outcome of the OPEC+ meeting on Thursday could have a significant impact on prices, as the group is expected to decide whether to extend its production cuts into 2021.
At the same time, the U.S. presidential election could also have a significant impact on prices, as the policies of the incoming administration could affect the demand outlook for oil. In the near term, prices could remain volatile as investors weigh the potential for a recovery against the risk of a resurgence in coronavirus cases.