OPEC+ in focus
November's rally for oil has been stunning. A strong move higher on the back of the November 09 Pfizer/BioNtech vaccine news has led to strong gains across the crude complex. Brent crude is +25% on the month and WTI over +35% since election night.
OPEC+ to hold near term direction
The key issue is whether OPEC+ will pull back the supply that is scheduled to return for the start of January. The current market expectations are that these production cuts will be extended for 3-6 months. So, this is the base case to work with:
- Extension to cuts minimal market reaction/bull run is sustained
- No extension to cuts sudden oil selling
Demand to return, but may take some time
The rally higher of course has been on the expectations of global demand returning. A Biden presidency helps and oil timespreads have firmed up showing that concerns on oil gluts are fading. However, there is still a considerable amount of Global Crude oil in floating storage compared to pre-pandemic levels, so there should be some pull backs in oil's movements higher on the ebbs and flows over the next few weeks and months
