Oil set for weekly gain ahead of OPEC+ meeting

Crude benchmarks are up about 7% over week following encouraging vaccine news

LONDON:

Oil prices were mixed on Friday but remained on course for a fourth straight week of gains ahead of an OPEC+ meeting early next week.

Brent crude for January rose $0.35, or 0.7%, to $48.15 a barrel by 1321 GMT and the more active February contract gained $0.42 to $48.21. West Texas Intermediate, meanwhile, was down $0.28, or 0.6%, at $45.43.

Both benchmarks are up about 7% over the week after encouraging news on potential Covid-19 vaccines from AstraZeneca and others. However, questions have been raised over AstraZeneca’s “vaccine for the world”, with several scientists sounding caution over the trial results.

“While a successful vaccine rollout should break the link between infection and mobility, even then global oil demand will likely only reach its pre-pandemic run rate by mid-2022,” JP Morgan said.

The Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia are leaning towards delaying next year’s planned increase in oil output, said three sources close to the OPEC+ group.

OPEC+ was planning to raise output by 2 million barrels per day (bpd) in January - about 2% of global consumption - after record supply cuts this year. OPEC+ ministers are due to meet from Monday.

“We reiterate our view that the alliance will likely choose to delay the 2 million bpd tapering decision on November 30 by a quarter, from January 1 to April 1,” JP Morgan said.

Informal talks between ministers are set to take place on Saturday.

Rising Libyan output is also contributing to concerns about oversupply in the market. The OPEC member, which is exempt from the oil cuts, has added more than 1.1 million bpd of output since early September.