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Oil Rises a Fourth Day Before OPEC+ Meeting on Production Levels

(Bloomberg) — Oil rose for a fourth day – aided by a falling dollar — before the OPEC+ alliance meets to decide whether it can keep lifting output as surging coronavirus infections smother the global energy demand recovery.Futures in New York climbed toward $49 a barrel after rising 0.6{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} last week. The alliance returned 500,000 barrels a day to the market this month and meets on Monday to decide on production levels for February. The outlook for the first half is very mixed and there are still many downside risks to juggle, OPEC Secretary-General Mohammad Barkindo said at a meeting on Sunday.The U.K. prime minister said tougher lockdown measures will likely be needed in England, while Japan is considering imposing another state of emergency. The oil demand situation is better in China, however, where a frigid winter and power shortages are prompting factories to rush to install diesel generators.The American crude benchmark has been trading near $48 a barrel for the last few sessions as the market weighs a shaky short-term energy demand outlook against an expected pick-up later in the year once enough people have been vaccinated. Oil has also been supported by a weakening dollar, which boosts the appeal of commodities that are priced in the currency.“Vaccine optimism versus a grim winter with regard to Covid’s grip in the western hemisphere, has carried over into the new year,” said Vandana Hari, the founder of Vanda Insights in Singapore. She saw a 50-50 chance that OPEC+ would increase output for February, noting that the alliance’s decision in December didn’t trigger a sell-off.At a meeting on Sunday, several countries including Saudi Arabia sounded cautious about raising output in February, delegates said. Russia has said OPEC+, which slashed output last year, can add another 500,000 barrels a day next month, while Riyadh has publicly kept its views under wraps.OPEC production rose by 190,000 barrels a day to 25.3 million barrels a day in December, with Libya driving the gain, according to JBC Energy. Angola, Iran, the United Arab Emirates, Venezuela and Algeria also boosted supply. OPEC is forecasting crude oil demand will rise to 95.9 million barrels a day this year from 90 million in 2020.Oil’s futures curve is reflecting the mixed short- and longer-term outlooks. Brent’s prompt timespread is just 4 cents a barrel in contango, a bearish market structure where near-dated prices are cheaper than later-dated ones, indicating sentiment is fairly evenly poised between optimism and pessimism.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

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