What is our trading focus?
OILUKDEC20 – Brent Crude Oil (December)
OILUSDEC20 – WTI Crude Oil (December)
WTI Crude Oil (OILUSDEC20) and Brent Crude Oil (OILUKDEC20) both trade lower on a day where commodities in general are benefiting from the dollar's renewed weakness. The energy market remains troubled by too much supply at a time of where a rise in the number of global coronavirus cases once again raise concerns about the direction of global fuel demand.
OPEC+ look set to meet on December 1 and decide whether to implement or postpone the previously agreed 1.9 million barrels/day production increase from January. With a vaccine still months away from being rolled out globally, the current slow recovery in fuel demand together with rising production Libya has left the group with a tough decision to make.
With the oil market currently stuck in the low $40’s there is no doubt that the key to short term direction of oil will depend on the outcome of that meeting. The U.S. election on November 3 will be another important driver given the opposite views on energy the two candidates hold. If the polls turn out to be right this time round and Joe Biden ends up in the White House, the market may receive a short term boost given expectations that increased regulations may slow a recovery in U.S production.
These two events are likely to be the main factors determining where Brent crude oil will finish the year within the $38/b to $48/b range we mentioned in our recently published Q4-2020 outlook. For now, both Brent and WTI crude oil remain stuck in ranges with Brent trading near the highs of the recently established range.