Organization of Petroleum Exporting Countries and its allies, OPEC+, meet and expectation is to maintain the level of production cuts in February

With expectations that OPEC and allies may limit oil production next month, barrel prices soared to highs in months this Monday (04/12). The hope that vaccines can contain the coronavirus and lead to a strong economic recovery this year were also influencing factors.

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Brent crude was up $0,76, or 1,47%, to settle at $52,56 a barrel by 8:11 AM ET. US crude advanced 0,47 cents, or 0,97%, to settle at $48,99 a barrel.

"The price movement today suggests that the market is assuming that OPEC+ will keep the level of cuts unchanged next month," said ING commodities strategist Warren Patterson.

About the Meeting of the Organization of Petroleum Exporting Countries OPEC+

Countries cut their production throughout 2020 as a result of lower demand for fuels. Now, OPEC+ analysts predict that demand for crude oil should reach 95,9 million barrels/day this year, which will represent an increase of 5,9 million barrels. The estimate of world economic growth for the year is 4,4%.

Most OPEC+ experts voiced opposition to an increase in oil supplies from February during a meeting on Sunday, three sources told Reuters on Monday.

In December, OPEC+ decided to increase output by 0,5 million barrels per day (bpd) from January as part of a gradual increase to 2 million bpd this year, but some members of the group questioned the need for a further increase now due to the rapid spread of the coronavirus.

“The start of the new year is bringing challenges for the OPEC+ group, as the balance of risks to the recovery of oil demand has shifted,” said Harry Tchilinguirian, analyst at BNP Paribas.

“The OPEC+ producer group may have to review its schedule and postpone a further adjustment to voluntary supply cuts due to the latest news about Covid,” he added.