Oil Declines on Stimulus Doubts as More OPEC+ Supply Looms

imageCommodities8 hours ago (Oct 19, 2020 06:45PM ET)

(C) Reuters. Oil Declines on Stimulus Doubts as More OPEC+ Supply Looms

(Bloomberg) — Oil fell for a fourth day as an agreement on more U.S. stimulus remained elusive, while OPEC and its allies showed no sign of changing course on plans to pare output cuts in January.

Futures in New York declined as much as 0.5%, after easing 0.1% on Monday. Opposition to a sizable aid package hardened in the Republican-controlled Senate even as House Speaker Nancy Pelosi said negotiators are still trying to reach a deal. The U.S. economic rebound is losing steam ahead of the Nov. 3 election amid a fresh rise in coronavirus cases, while Federal Reserve officials warn that growth will slow without additional federal spending.

A meeting of the OPEC+ Joint Ministerial Monitoring Committee on Monday didn’t discuss the plan to further taper production cuts from January. Still, Saudi Oil Minister Prince Abdulaziz Bin Salman called on the alliance to be proactive in the face of uncertain demand, and Russian Energy Minister Alexander Novak said there was agreement on continuing to implement agreed output curbs in full.

Oil ministers met against a backdrop of uneven oil demand. For months now, the recovery in consumption has been driven largely by China, whose economic expansion showed signs of broadening in September. Yet, other countries are still clawing their way out of the slump, with fresh outbreaks of Covid-19 in Europe and the U.S. weighing on energy use.

If market uncertainty persists through next month, OPEC+ will probably decide to bring back less supply than the planned 1.9 million barrels a day in January, Citigroup Inc (NYSE:C). analyst Ed Morse said in a report. Meanwhile, Morningstar’s Sandy Fielden said that the global and U.S. crude benchmarks may slip back to the $30 a barrel range if the economic recovery remains slow and producers don’t cut output.

ConocoPhillips’s takeover of Concho Resources (NYSE:CXO) Inc. isn’t just shaking up the U.S. shale industry — it may have ramifications for the global oil market and the long-term price of crude. Conoco said Monday it will review its hedging strategy once it completes the $9.7 billion deal.

(C)2020 Bloomberg L.P.

Oil Declines on Stimulus Doubts as More OPEC+ Supply Looms

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