November 30, 2021

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The decline in oil and the growth of “Corona” injuries fuel market fears


Oil prices fell yesterday, Wednesday, due to fears that the continued decline in fuel demand in light of the high cases of Coronavirus in Europe and the United States, the largest consumer of crude in the world, may impede economic growth.
The monthly report of the Organization of Petroleum Exporting Countries (OPEC) stated on Tuesday that oil demand in 2021 will increase by 6.54 million barrels per day to 96.84 million barrels per day, 800 thousand barrels less than expectations a month ago, due to the economic disruptions caused by the Corona pandemic.
Brent crude for December delivery fell 17 cents, equivalent to 0.4 percent, to $ 42.28 by 0649 GMT, while US West Texas Intermediate crude lost 18 cents, equivalent to 0.5 percent, to $ 40.02.
The Kremlin said Tuesday that Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman discussed the current situation in energy markets during a phone call.
UAE Energy Minister Suhail Al Mazrouei said yesterday, Tuesday, that the oil producers in the OPEC + group will adhere to their plans to reduce the size of oil production cuts, starting from January.
Edward Moya, chief market analyst at Oanda, said, “Oil prices are stable in Asia with the bullish trend of the dollar being halted while the Russians and the Saudis are showing a united front to get OPEC + producers to fulfill pledges to cut production.”
He continued, “Crude prices seem to be greatly threatened with the continuing spread of the Corona virus, such as forest fires in Europe and the increase in infections in America.”
On the supply side, the recovery in production from the Gulf of Mexico in the United States continued four days after Hurricane Delta hit, and the percentage of shutdowns decreased to 44 percent yesterday from 69 percent on Monday.
For its part, the International Energy Agency said yesterday, Wednesday, that global oil stocks, which increased during the height of the Corona pandemic, are steadily declining, but a second wave of the pandemic slows demand and hinders the efforts of producers to balance the market.
OPEC + producers, OPEC member states and others including Russia, intend to increase supplies by two million barrels per day from January, and the International Energy Agency expects the ceasefire in Libya to increase production there to 700,000 barrels per day in December from 300 thousand barrels at the moment.
“There is only limited room in the market to absorb the surplus supply in the next few months,” the agency said in its monthly report. “Those who hope for a more balanced oil market are looking for an unstable target.”
OPEC + producers are currently reducing oil production by 7.7 million barrels per day, and the International Energy Agency said, “Producers’ efforts have yielded some success,” referring to relatively stable oil prices and strong inventory withdrawals, with an implicit decline in global stocks of 2.3 million barrels per day in the quarter. The third is expected to drop 4.1 million barrels per day in the last quarter.
But the agency added that the recovery in summer demand is now slowing due to a second wave of the Corona pandemic and new restrictions on movement.
“This certainly raises doubts about the strength of the expected economic recovery, and thus the prospects for oil demand growth,” she said.
The agency noted that global oil supplies decreased in September as OPEC + countries strengthened their commitment to production cuts.
(Agencies)