LONDON – Oil prices fell on Monday on uncertainty about whether OPEC+ would agree to extend their large output cuts at talks this week, but vaccine hopes still kept benchmark crudes on track to rise by more than a fifth in November.
Brent crude for January delivery, a contract that expires on Monday, had dropped 50 cents or 1% to $47.68 a barrel by 1435 GMT. The more actively traded February Brent contract was down 41 cents at $47.84.
U.S. West Texas Intermediate crude for January fell 27 cents, or 0.6%, to $45.26 a barrel.
Oil prices, which are on track to rise more than 20% in November, have been climbing as vaccine developments raised hopes for an economic recovery and a boost to fuel demand.
But oil broker PVM’s Tamas Varga said “longs are edging towards the exit” after OPEC+ members failed to agree on policy in informal talks ahead of Monday and Tuesday’s formal meetings.
“Some member countries will be hard to convince about further output discipline and in case of an unexpected fallout not only the price repercussions will hurt producers, but the general existence of the OPEC alliance will be questioned.”
As OPEC members began talks on Monday, Iranian Oil Minister Bijan Zanganeh said it “won’t be an easy meeting” as he said some states opposed an extension of the cuts.
The Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+, are due to ease existing cuts by 2 million barrels per day (bpd) from January. But an uneven recovery in global demand has prompted a rethink.
Hussein Sayed, analyst at FXTM, said demand had recovered in Asia but not Europe and the Americas, presenting OPEC+ with a “challenging choice on whether to delay or bring back more oil”.
Goldman Sachs said a winter surge in COVID-19 cases would not prevent the oil market rebalancing as a result of vaccine progress. It saw Brent rising to $65 in 2021.
A Reuters poll of 40 economists and analysts forecast Brent would average $49.35 a barrel next year.
Helping lift oil off its session lows, Moderna Inc said it would apply for U.S. and European emergency authorisation for its COVID-19 vaccine.
Graphic: Brent and WTI price forecast for 2021 –
