The prices of oil continued to slump four days in a row. This situation occurred because the agreement on U.S. stimulus remained elusive and seemed unlikely to reach an agreement. Many remain convinced that this funding will not be done before the election.
Meanwhile, OPEC and its allies showed no signs of changing direction on plans to reduce production cuts in January. This production reduction is based on several considerations such as declining demand which is happened in the market right now.
Futures in New York fell as much as 0.5%, having earlier fallen as much as 0.1% on Monday. Opposition to the sizeable aid package is still taking place in the Senate. The opposition is Republican which is controlled as a representative there.
Growth Will Slow Without Stimulus
Interestingly, opposition from Republicans continued even as House Speaker Nancy Pelosi said negotiators were still trying to reach an agreement. This kind of uncertainty is what many people anticipate, especially market participants.
The U.S. economic rebound also lost steam ahead of the November 3 general election. This comes amid a new increase in cases of coronavirus in the country. As it is known that the US is still battling a pandemic until now.
On the other hand, Federal Reserve officials also warned that growth would slow without additional federal spending. A meeting of the Joint Monitoring Committee of the OPEC+ Ministry on Monday did not discuss plans for further production reductions starting January.
However, Saudi Arabia's Oil Minister Prince Abdulaziz Bin Salman called on the alliance to remain proactive in the face of current uncertain demands. It is really important so that demand does not deteriorate further and fix the oil’s price.
The World's Petroleum Minister Discusses the Demand
Russian Energy Minister Alexander Novak said there was an agreement to continue implementing the agreed production restrictions in the full form. The world's petroleum ministers are meeting against a backdrop of uneven oil demand.
For several months this year, the recovery in consumption was largely driven by China. The country showed that its economic expansion saw widespread signs in September. Of course, this is considered good and must be followed by others.
However, other countries are still trying to rise, with new outbreaks of Covid-19 in Europe and the US. OPEC+ may decide to return less supply than planned to 1.9 million barrels per day in January. This was conveyed by Citigroup Inc.'s Ed Morse analysts in a report.
Crude Oil Prices May Fall Again
Meanwhile, Morningstar's Sandy Fielden said that global and U.S. crude benchmarks could drop back to the $30 per barrel price range. It is especially so if the economic recovery remains slow and manufacturers do not cut production.
ConocoPhillips' takeover of Concho ResourcesInc in the US also creates an impact. The move may also have an impact on the global commodity market and long-term crude oil prices. Situations like this should be watched by market participants.
Conoco said that they would review their best strategy after completing the $9.7 billion deal. It was said on Monday. Therefore, the market will continue to monitor any movements made by oil-related parties. Their strategy may change the prices in the future.
USD Slumps Due to Stimulus Sentiment
News of stimulus is indeed the most popular in Washington. The news goes through some other complicated things on Capitol Hill today. The office of House Speaker Nancy Pelosi reports on progress in talks on stimulus with Treasury Secretary Steven Mnuchin.
Pelosi tweeted that they were constantly trying to narrow the differences. Monday's positive note came after Pelosi set a 48-hour deadline for a deal yesterday. According to California Democratic spokesman Drew Hammill, the speaker and secretary spoke for nearly an hour.