Oil prices raised on Wednesday as the market waits for the production pact from the Organization of Petroleum Exporting Countries (OPEC), Russia and its allies; also, Britain’s approval of the covid-19 vaccine boosts hopes for an oil demand recovery.
In Wednesday, Brent crude oil futures were up 34 cents, 0,7% to $47,76 per barrel. While the West Texas Intermediate grew 36 cents, 0,8%, to a total of $44,91 per barrel.
As we reported earlier this week, consensus about extending production cuts into the first months of 2021 was only at OPEC’s first block. Russia and other allies known as the second block, or OPEC+, didn’t agree on production cuts, but in an escalated incremental starting in January 2021.
The Organization failed to announce consensus and postponed a Tuesday meeting to Thursday; because of this, oil prices were slightly hit, as the industry expects a production pact with uncertainty.
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Covid vaccine fills market with hopes for normal life
Production cuts imposed by OPEC this year were around 7,7 million barrels a day, as a containment measure for the covid-19 pandemic.
It was widely expected to extend those cuts into January-March, 2021, in order to balance prices, and supply demand, amid the resurgence of coronavirus cases in winter time. But, even if the United Arab Emirates supports further cuts, it would still struggle with deep output reductions well into 2021.
“Energy markets will remain on edge until OPEC+ gets past tomorrow’s meeting, still oil prices should continue to have underlying support as vaccine makers announce start dates for beginning immunizations,” said Edward Moya, senior market analyst at OANDA, quoted by Reuters.
As Britain on Wednesday became the first country to approve the covid-19 vaccine, ahead of the U.S. and Europe, markets expect a soon recovery for oil and fuels demand. Britain’s decision is seen as the first step towards going back to a normal life, globally.