Oil reported a rise on Thursday morning in Asia. This is because investors are looking toward sustainable OPEC+ supply cuts. This reduction is early as one of the appropriate measures given the declining demand. On the other hand, the effects of the corona pandemic are still large.
Brent crude futures rose as little as 0.18% to $43.88. Elsewhere, the WTI futures contract rose 0.27% to $41.56. Both Brent futures and WTi remain above the $40 figure. This important commodity continues to increase due to a combination of possible supply reductions.
In addition, optimism over the COVID-19 vaccine also plays an important role. Prices have risen more than 12% over the week to date. The price is more than $40 a barrel, but indeed the corona pandemic looks likely to still withstand growing demand in the near future.
Supply Reduction Continues
The market is driven by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) which looks set to maintain current supply cuts through 2021. In fact, maybe they'll deepen it. This was conveyed by Algerian energy minister Abdelmadjid Attar on Wednesday.
For information, Algeria is the current chairman of OPEC. Abdelmadjid can assure all parties that OPEC remains committed to taking action in accordance with market conditions, working closely with its partners in the Declaration of Cooperation, in a proactive and effective manner.
Of course, this includes the possibility to extend today's production adjustments until later 2021. This situation is also done to deepen the adjustment. Of course, such a decision will be taken if indeed market conditions require such a. It is a wise move.
OPEC has been working to reduce current production cuts. Initially, production was 7.7 million barrels per day (BPH) and has now been reduced to 2 million barrels per day. Of course, this reduction has gone through a lot of research and careful calculations so that no one is harmed.
The Pandemic Pushes the Bullish
Adding to the bullish sentiment for oil is the prospect of a COVID-19 vaccine. Pfizer Inc posted positive results from a phase III trial earlier in the week. The market is starting to look to a time when the coronavirus no longer determines global demand.
Pfizer and BioNTech's combined vaccines report effectiveness rates of up to 90%. It is great news and there is no question. However, this vaccine takes time until it is allowed to be produced and used. There is a series of other clinical evidence required.
It means that oil commodities also need time for demand to have a positive impact on this discovery. This was conveyed by Lachlan Shaw, National Australia Bank's head of commodity research. There is no denying that this pandemic has had a huge impact.
The ever-increasing number of COVID-19 cases in Europe, the US, and Latin America continue to put fuel demand under pressure. OPEC acknowledged that demand will recover more slowly in 2021 than previously forecast. It makes quite a sense so far.
Market Projections in 2021
In many ways, the market is looking to the future until 2021. This is the moment when some parties actually launch vaccines. In addition, OPEC and its allies are withholding some of the scheduled supply increases. This opinion was given by Shaw some time ago.
OPEC+ will hold a ministerial-level summit on November 17. Then, it will also be followed by further meetings on November 30 and December 1. Investors are also awaiting U.S. Energy Information Administration crude oil supply data to be released today.
The factors above are not only affecting this oil movement, but also other commodities. The examples are gold and some main currencies in the market. They are still fluctuating until now where the US presidential election also has an impact on it.
