Oil prices remained mostly unchanged on Friday, despite an overall bearish sentiment caused by the pandemic, with the only bullish note coming from Russia.
Rystad Energy’s Head of Oil Markets Bjornar Tonhaugen, has commented on the day's developments:
"The question among traders today is ‘Have oil prices really stabilised’?
Prices definitely look like they are holding tight on current levels, even at times when the market is desperate for some bullish light on the horizon.
Yet the indicators are mostly bearish these days for oil.
The European leading flash PMI indicators are confirming that the services sector is lagging as Covid-restrictions hamper growth for this market segment, while manufacturing continues to recover.
Oil demand continues to stagnate in Europe with the second Covid-19 wave now fully blown and lockdowns coming back in place across many countries of the continent.
It looks as the market will remain in tug-of-war mode until the US elections, which will provide OPEC+ with some more clarity for the alliance to make a decision on how to continue to rebalance market in 2021.
The last US presidential debate yesterday, reaffirmed Biden’s view that he would like emissions from the oil and gas industry to come down over time, with renewable energy taking centre stage.
The market considers this as more relevant for the medium and long-term markets and valuation, rather than affecting oil prices in the short term.
The only bullish piece of news comes from Russia. President Putin’s comments that Russia is open for not raising supply in 2021 as prescribed in the current OPEC+ agreement, is also supporting prices this morning.
It is a verbal confirmation from a major oil producer in OPEC+ that keeping agreed cuts in current levels from January, instead of increasing, is a realistic possibility on the table.
Traders cherished on these statements and now seem to be waiting for OPEC’s decisive next meeting before materially depressing prices further."
Read the article online at: https://www.oilfieldtechnology.com/special-reports/23102020/oil-prices-on-the-mute-despite-bearish-market-atmosphere/