Oil prices marked a straight fourth week of gains driven by the hopeful news about the COVID-19 vaccine and the OPEC+ producers meeting to be held next week.
Brent, the benchmark for purchases on global financial markets, under which two-thirds of the world’s oil is traded, posted a weekly gain of 7.2 percent and yesterday it closed at 0.8 percent higher with $48.18 per barrel.
US West Texas Intermediate (WTI), which tracks US crude grades, rounded off the week at 8 percent higher. However crude futures fell 0.39 percent to settle at $45.53 a barrel on Friday.
While the Organization of the Petroleum Exporting Countries (OPEC) is conducting its annual meeting on December 1, it is said that the group is in a plan to extend the current level of controls for another three months.
When the pandemic-driven movement restriction had led to a fall in the oil demand the Opec+ cut its record of 9.7 million barrels per day between May and July to balance crude prices. Since then the alliance has narrowed the restrictions and now it is drawing back 7 million BPD.
Experts say that the group was planning to further reduce the restrictions by the beginning of the new year, but currently, OPEC+ is considering sustaining the current level of cuts until the end of the first quarter of 2021 as the restrictions in some countries following the second wave of the virus affects the energy demand.
“If Opec+ decides to extend its phase two cuts into 2021, then the crude overhang should disappear by July 2021. But if not, this will take through in late 2021. We believe there is still broad consensus within Opec+ (including Russia) to extend phase two of its cuts into Q1 2021,” Energy Aspects said in a note on Thursday.
“Global demand seems to have recovered beyond 95 percent of pre-crisis levels, with Asia especially sticking out in terms of positive dynamics more recently. The upcoming petro-nations’ meeting should bring an extension of the supply cuts, in order to not threaten the oil-market recovery and to make room for Libya’s export boost.”
Positive news on potential COVID-19 vaccines from AstraZeneca, Moderna and Pfizer-BioNTech have lifted the market. Demand for crude is also picking up in some parts of the world.