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During the last two weeks, oil prices were rising. However, today, they showed a drop. The decline was mainly triggered by investors' concerns about the postponement of the OPEC meeting. It is scheduled to take place on December 1-3.
Nevertheless, ministers of OPEC member countries have agreed on the fact that oil production cuts will be in force in the first quarter of 2021. At the moment, crude oil production cut level is 7.7 million barrels per day. Members of OPEC proposed to maintain this cut level until there are clear signs of oil market stabilization. The OPEC meeting was postponed urgently. This situation was caused by the fact that there was a sudden need to get additional analytical advice on the current market situation.
Most countries are concerned about the fact that demand for oil remains extremely low. This is the main reason to extend oil production cuts for some time. However, there are those who oppose this proposal. They believe that it is necessary to continue increasing oil output as it may bring more money than at the beginning of the year. Notably, in that period, oil slumped to record lows. Moreover, the development of the coronavirus vaccine is at its final stage. Thus, there are hopes that the virus spread could be curbed in the near future. It means that demand for oil may recover to match the existing supply.
There is no wonder that the negotiations have stalled amid such announcements. What is more, European and US indicators display dropping demand. At the same time, the situation in Asian countries is improving and demand for oil is mounting. All these disagreements made OPEC take a break in order to make a reasonable decision. Analysts suppose that it is a positive signal and the organization will extend oil cuts in the upcoming year.
Brent oil futures for February delivery dropped by 0.71% or $0.34. At the moment, Brent oil is trading at $47.54 per barrel. Yesterday, Brent closed with a decline of 0.8% or $0.37 to trade at $47.55 per barrel.
At the same time, WTI futures for January slid by 0.62% or $0.28 to $45.06 per barrel. On Monday, the American benchmark closed in the red territory. Thus, WTI crude was down by 0.4% or $0.19 to settle at $45.34 per barrel.
Summing up, we can say that in November, both benchmarks gained in value. Thus, Brent crude advanced by 27% whereas WTI oil futures climbed by 26.7%. Such results are really good. Notably, at the beginning of November, the oil market situation was alarming and there were no reasons for rise.
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