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OPEC worried about oil prices amid a new Covid wave

oil prices 2021

The oil prices are steady today, but the supply chain in the globe’s oil and gas industry is facing a new challenge as the second wave of coronavirus is hitting Europe and the United States.

As Reuters reports, Brent crude oil closed its futures at $42.64 a barrel by 1355 GMT.
The futures of the West Texas Intermediate fell 37 cents to $40.46 while the December contract had just a 7 cents crop, with $40.99 per barrel.

The barrel had been trading in a range of $2 or $2.50 price between high and low price per barrel for the last two weeks.

As Covid cases reach 40 million around the globe, as of yesterday, lockdown measures are getting harder, and the Organization of the Petroleum Exporting Countries (OPEC) is raising eyebrows as to the future of the supply and production around the globe.

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The OPEC meeting

Earlier this week, OPEC and its allies sustained a meeting and pledged to support the oil market. Nevertheless they had significant concerns about the growth of new Covid cases.

“Tuesday found oil traders struggling to make up their minds on how to interpret the result of the previous day’s OPEC+ meeting”, Bjornar Tonhaugen, head of oil markets at Rystad Energy referred.

The consensus was to stick to a deal to curb the output to 7.7 million barrels per day up to the end of the year. Then increase the production by 2 million more in January.

Never the less, analysts like JP Morgan estimate that the weak demand could prompt OPEC to delay the increase in their production.

Russian Energy Minister, Alexander Novak, said that the demand recovery is uneven, and there is not much evidence that it will recover soon.

In fact, Russia could agree to cut down their production even more if the global markets worsen, Reuters sources said.

The only country of the OPEC ramping up its production is Libya; which is except form the cuts, due to the almost complete shut of their production because of the armed conflict; on October 11, their biggest oil field, Sharara, reinitiated operations and now is about 150,000 bpd, about half at its capacity.

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