Oil prices sank over 1% on Monday, erasing the positive sentiment that the market boasted last week after OPEC+ agreed on a plan for January production.
While OPEC+ agreed to add 500,000 barrels of oil production per day to its quota, it was less of an increase than its original plan had called for. The markets interpreted this as a positive sign, and, combined with positive developments with several covid-19 vaccines, oil prices rallied last week.
But reports of the increasing number of coronavirus cases is threatening to dampen the optimism that OPEC+ created, sending the price of Brent crude down 1.18% to $48.67. The price of a WTI barrel was off 1.32% on Monday, at $45.65.
The reality is that in the short term, the vaccine news-and OPEC+ developments-won't have any effect on oil demand, which has plagued the oil market since even before the pandemic started. But certainly after the pandemic set in, particularly in the United States, the lockdowns tamped down activity, and with it, oil demand. And even the best vaccine news that could be hoped for will have only a muted effect on oil demand through at least the first half of next year.
The number of covid-related deaths in the United States has been on the rise over the last week, but perhaps what is moving the need are extended lockdowns and restrictions on activities in certain parts of the country.
Michigan's Governor, Gretchen Whitmer, extended a series of restrictions that includes a ban on in-restaurant dining was extended today until December 20. California residents-or at least 85% of them-are under a strict stay-at-home order through Christmas. Ohio is extending its 10 p.m. curfew, which was set to expire this Thursday.
The extended restrictions are a clear sign that oil demand isn't going to rebound just yet.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
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Comments
There can be no doubt I think now in the War between OPEC and the USA the USA has now officially won. Certainly Boeing shareholders are suddenly very happy!
Anyhow we'll see what the API report tomorrow and then far more accurate EIA report Wednesday have to say but it was a truly wild day in the physical trading of oil today. Tesla has had a truly awesome move to the upside these past few weeks but especially today as well. I think their sales goal of 500,000 for this Year 2020 will be easily met.
Oddly enough oil prices still seem very high to me...as do gasoline and diesel fuel prices. It seems to me there are very real management issues amongst all the energy Companies in North America at the moment...but still nothing as bad as the fools who bought into the entire MLP scam of 2020.
Real Estate investing doesn't look very ahem *healthy* ahem at the moment as well...unless you live in the Dakotas or Minnesota which seem to have a well paid for tho hardly cheap tax base.
Definitely bullish on $xel Xcel Energy at the moment.