Hopes of a vaccine lifted oil markets earlier this week, with Brent crude jumping to $43 a barrel. Bulls were also cheered by the Saudi energy minister, who suggested that the so-called Opec+ output deal could be in for a “tweak”. The current deal sees major oil producers such as Russia and Saudi Arabia hold output 7.7 million barrels per day (mbpd) below 2018 levels. That figure is due to fall to 5.7mbpd in January, but the latest wave of lockdowns will hit global demand, prompting speculation that the output curbs could be extended deep into next year. Global crude oil demand was roughly 100mbpd last year, but the pandemic has reduced the world’s appetite for the fuel by about 10%.
The oil outlook remains shaky, says Julian Lee on Bloomberg. The demand slump extends even to places that have dealt with the virus well: Japanese imports from the main Persian Gulf producers are still down by half compared with pre-pandemic levels. On the supply side, US output is proving robust. America is China’s third biggest oil-supplier after Russia and Saudi Arabia. The second wave of lockdowns will hold oil markets “in check” over the coming months, says Stephen Innes of Axi. But the prospect of a vaccine is a “game-changer for the oil complex”. With Opec+ signalling that it is ready to do “whatever it takes” to support prices, oil prices have two “planks” to rest on while they wait out the winter.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Spot the Dog: £67bn in underperforming funds revealedAround 137 funds consistently underperformed their benchmark, BestInvest's Spot the Dog report finds. Which funds are in the dog house?
-
What does a BP and Shell merger mean for the UK oil industry?BP’s struggles have made it vulnerable to a takeover. Could it merge with Shell to create a British behemoth?
-
Why is the supply of oil rising?The supply of oil is rising despite conflict in the Middle East. What's causing the increase?
-
What's next for oil prices?
How are world economies affecting oil prices and the demand for oil?
-
How to profit from high oil pricesTips The price of oil looks set to remain high for the foreseeable future - and could yet go a lot higher as demand outstrips supply. Rupert Hargreaves picks the best ways to invest for rising oil prices.
-
Oil price keeps rising despite Opec+ production riseNews The price of oil reached $120 a barrel this week, despite Opec+ saying it would raise production by 648,000 barrels a day.
-
Think the oil price is high now? You ain’t seen nothing yetAnalysis The oil price has been on a tear in recent months. Dominic Frisby explains why oil in fact is still very cheap relative to other assets.
-
The surging oil price will hurt – but it also creates opportunitiesAnalysis The price of oil is at its highest since 2008. That's bad news for most people – but it also means opportunities for investors, says John Stepek.
-
Oil price races higher as demand reboundsNews Supply constraints, increased demand and the Russian threat to Ukraine are sending the oil price racing towards $100 a barrel.
-
Oil price hits seven-year high after Abu Dhabi attackNews The oil price hit a seven-year high after Houthi rebels in Yemen staged a drone attack on an oil storage site in Abu Dhabi.
