Oil gains for fourth straight week ahead of Opec+ output meeting

Bloomberg

Oil rose for a fourth straight week, buoyed by optimism over Covid-19 vaccine progress ahead of an Opec+ ministerial gathering next week.
Futures in New York advanced 8% this week, despite edging lower. The shape of the oil futures curve firmed over recent sessions with some nearer-dated futures contracts rising above later-dated ones. It’s a sign of how the market has dramatically repriced the increased likelihood of a vaccine rollout jumpstarting a stronger demand rebound next year.
Meanwhile, informal talks between an Opec+ panel will take place on Sunday after previously being scheduled for Saturday. That will precede the formal ministerial meetings scheduled for Monday and Tuesday, where producers will decide whether to postpone a planned output hike.
“With three vaccine candidates at least close to deployment, a material recovery in economic activity and oil consumption in the next six months is on the horizon,” said Erduan Reid, head of crude swaps at Eagle Commodities in London. If Opec+ extends its current output cuts, “most balance estimates assume a first-quarter 2021 global draw driven by Asia, even if Europe and the US build on mobility restrictions.”
While most analysts surveyed by Bloomberg are forecasting Opec+ will postpone the planned increase by three months to March, oil’s recent rally may further complicate the decision. Meanwhile, Algeria, which holds the rotating Opec presidency this year, said the group must remain cautious because the organisation’s internal data point to the risk of a new oil surplus emerging next year. That’s if the cartel and its allies go ahead with a supply hike.