Why The Oil Prices Are Down?


Oil prices decline ahead of OPEC+ monitoring committee meeting

Oil prices are down today amid growing fears about the outlook for demand due to the rise in coronavirus infections worldwide.

The focus of financial news is the online meeting of the ministers of the OPEC + Monitoring Committee (JMMC), who will soon discuss the situation on the oil market and the implementation of agreements to reduce oil production.

As of the previous session, the price of Brent crude was at $ 42.81 per barrel, according to data from the London Stock Exchange. But already at the opening of a new session, prices fell by 0.26% and amounted to $42.72 At the same time, WTI oil fell 0.37% to $40.73 per barrel, according to data from electronic trading on the NYMEX commodity exchange in New York. Last Friday, Brent crude futures fell another 0.5%.

The second wave of coronavirus in many countries around the world has once again called into question the prospects for oil demand. According to the OPEC chief secretary, the situation with the expected demand for oil remains extremely disappointing, which does not allow making plans to increase world oil production.

Increase in US oil production

In the meantime, production is likely to continue to rise, in part thanks to Libya’s boost. Besides, data from the American oilfield services company Baker Hughes, released on Friday, showed an increase in the number of operating oil rigs in the United States for the fourth week in a row, indicating a gradual increase in drilling activity in the United States.

A plan to reduce worldwide oil production

It seems increasingly likely that OPEC + will refuse the idea of increasing oil production early next year, given the increased incidence of COVID-19 and the stagnation in demand, said ING commodities analyst Warren Patterson.

In early October, The Wall Street Journal, citing sources, wrote that Saudi Arabia would ask OPEC countries to refuse the planned increase in oil production in January 2021.