Oil rally cools after Opec trims demand forecasts for Q1 2021

Bloomberg

Oil came off session highs as the Organisation of Petroleum Exporting Countries (Opec) cut forecasts for oil demand again, pointing to uncertainties around the pandemic and the rollout of vaccines.
Futures were little changed after rising as much as 1.9% in New York. The Opec in a monthly report reduced projections for global fuel consumption in the first quarter of 2021 by 1 million barrels a day.
The demand outlook offset crude’s earlier rally following an explosion at the Saudi port of Jeddah. Saudi Arabia said a terrorist attack was behind the incident, but that it didn’t affect fuel supplies.
Between now and a widespread rollout of a successful vaccine, “demand is on the chopping block,” said Bob Yawger, director of the futures division at Mizuho Securities.
Oil has rallied roughly 30% since the end of October, but government efforts to control the spread of Covid-19 remain a persistent near-term headwind. The UK is said to be putting London under its toughest
coronavirus restrictions from Thursday, while the Dutch government is expected to lay out extra measures on Monday.
“New mobility restrictions in Europe and weaker oil demand in India in November should be a reminder that the road to a full recovery in oil demand will remain bumpy,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
There are signs that physical oil markets remain robust. Oman crude on the Dubai Mercantile Exchange is trading in backwardation — where nearby contracts are more expensive than later ones — indicating tight supplies. Indian Oil Corp. was snapping up cargoes last week, while a unit of China’s Rongsheng Petrochemical is seeking barrels for March delivery.
The amount of oil stored on giant tankers at sea is also dwindling, the latest sign the market is whittling away a glut built up earlier in the year. Floating storage falls 11% last week to 86 million barrels, according to Vortexa Ltd.