Oil futures eased somewhat on Friday as soaring COVID-19 cases in the US and Europe added to concerns over demand for crude oil. However, prices rose higher over the week, partly due to a pledge from OPEC + that it is still committed to production cuts.
The petroleum exporting countries organization and its allies, collectively known as OPEC +, appear to have "comforted the markets leading them to balance the oil market," said Edward Moya, senior market analyst at Oanda, in a market update.
Oil prices found support for the week after Saudi Arabia and Russia reportedly reaffirmed their commitment to the OPEC + production cut deal.
This raised expectations that "the alliance could take further action to either address the underperformance of some members or to re-evaluate its plan to start production again in January," said Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy. "If those hopes prove futile, prices could be in danger again next week after the OPEC + meeting."
The Joint Ministerial Monitoring Committee of OPEC and non-OPEC [JMMC], which monitors compliance with production cuts, is due to meet on Monday.
West Texas Intermediate Crude for delivery in November
fell 8 cents, or 0.2%, to $ 40.88 a barrel on the New York Mercantile Exchange. The prices for the Front Month contract, which expires on Tuesday, increased 0.7% weekly.
Read: The US presidential elections could shake up the oil market
December Brent crude
The global benchmark lost 23 cents, or 0.5%, to $ 42.93 a barrel at ICE Futures Europe. Brent was up 0.2% weekly.
However, Moya warned that "the revival of oil production in Libya could make the supply-side narrative difficult".
Bloomberg reported Thursday that Libya's production rose to around 500,000 barrels a day after reopening facilities last month that had been shut down since January due to a civil war-related blockade.
"The market is concerned about how the increasing lockdown measures in Europe will affect demand," said Marshall Gittler, head of investment research at BDSwiss Group, in a note. "Mobility data suggests that travel in Europe has only recovered to 60% of its prepandemic levels and is on the verge of new success as several European countries restrain gatherings."
In the US, data released on Friday showed industrial production fell for the first time in five trains, falling 0.6% in September. This surprised economists, who expected more steady growth.
"The not-too-distant memory of negative oil prices still stings traders into space as the risk of another crisis in the supply chain would increase exponentially as new lockdown measures are expected in the US," analysts write in the latest Sevens newsletter Research report. Nevertheless, "more widespread bans are rather unlikely".
Regarding the meeting of the OPEC + committee, Rodriguez-Masiu from Rystad said: "We expect some strong words on Monday to compensate for the underperformance" of some oil producers. "What everyone is wondering is whether there will be action against the stragglers this time or whether the bashing will remain on a verbal level."
Prices showed little reaction to data from Baker Hughes on Friday
This represents a fourth consecutive weekly increase in the number of active US oil rigs. The number of active U.S. drilling rigs drilling for oil rose 12 this week to 205.
Oil fell sharply during Wednesday's session but ended the day with small losses. Crude oil prices rebounded after a round of weekly inventory data from the Energy Information Administration showing an above-expected decline in US crude oil inventories, as well as a decline in gasoline inventories and a much-above-expected decline in distillate inventories.
Gasoline on Nymex Friday November
The price was $ 1.1688 per gallon, a decrease of nearly 1%. The previous month's prices posted a weekly drop of around 2.9% while heating oil was down in November
lost 0.8% to $ 1.1791 a gallon, ending 1.1% lower for the week.
November natural gas
less than 0.1% to $ 2.773 per million thermal units, a 1.2% weekly increase. The EIA on Thursday reported a less-than-expected weekly increase in U.S. natural gas shipments.