This morning, global oil prices are actively declining. This is due to the expectation of the results of the OPEC conference, which will take place tomorrow. Here, Ministers will have to decide the future of the current restrictions on oil production: whether to extend their validity or not.
The price of Brent crude oil was $47.34 per barrel earlier, which is $0.61 (1.29%) lower than the closing price of the previous session.
By that time, the price of WTI crude oil futures amounted to $ 44.84 per barrel, which is $ 0.69 (1.52%) below the level of previous trading.
On Friday, it was announced that the position of the leaders of the OPEC+ deal was not to increase crude oil production from January 2021, but to keep the current quotas for the first quarter of 2021. The conference will determine from what month and in what volume it is possible to start increasing the energy carrier.
The markets were also alarmed by media reports that not all countries agree to further cut production in line with current quotas in the first quarter of next year. Last Sunday, members of the OPEC+ Joint Ministerial Monitoring Committee or JMMC, gathered in an informal meeting to discuss these issues. However, Bloomberg reported that the meeting has not yielded results. This is because Kazakhstan and the United Arab Emirates did not support the suggestion of maintaining the current quotas. There is clear disunity within OPEC, which increases the likelihood that the group will not agree to extend the current reduction in production.
This uncertainty primarily put pressure on oil prices. Market players have long expected a delay in increasing production, and the lack of consensus on this among OPEC+ members leads to a price decline.
Last week, quotes from Brent and WTI supported the news about the effectiveness of the coronavirus vaccine from AstraZeneca and the beginning of the transfer of power to Mr. J. Biden. As a result, the price of oil rose by more than 7%. But despite the recent growth, many analysts do not believe crude oil's ability to rise above $ 50 per barrel. The situation is worsened by rising doubts about the safety and efficacy of vaccines under development as well as UAE's intentions to withdraw from the agreement to cut oil production. Therefore, Brent oil is expected to end this week below $ 45 per barrel.
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