Oil prices ended in scattered order on Friday as operators await the OPEC+ meeting scheduled for Monday and Tuesday next.

Oil prices ended in disarray on Friday as operators feverishly awaited the next decision from OPEC+ on its production quotas.

A barrel of US light purpose (WTI) for January delivery returned 0.8% to $45.53 on the Nymex as a barrel of Brent North Sea of the same maturity advanced 0.8% to 48, $18 in London. The two world references, however, show a fourth consecutive week of growth (with a weekly gain of more than 7%), thanks to hopes of a “return to normal life” thanks to vaccines against Covid-19. Since the beginning of November, the WTI has now risen to +27% and the Brent has recovered 28.5%, the highest since last March.

Towards a postponement of production increases beyond December 31

According to 'Bloomberg' sources, Saudi Arabia and Russia convened the alliance for last-minute talks on Saturday, two days before a formal meeting that is expected to result in the cartel's bid and its allies at current levels for a few more months due to continued uncertainty about the strength of demand. However, the decision is by no means certain given public complaints from Iraq and Nigeria, and private disputes with the United Arab Emirates. "The technical foundations have been laid for OPEC + to postpone the gradual increase in its production", explains to the agency Harry Tchilinguirian, head of commodity strategy at BNP Paribas. "Now we have to put the political foundations in place."

The two main members of the Organization, Russian Deputy Prime Minister Alexander Novak and Saudi Energy Minister Abdulaziz bin Salman, have requested an informal videoconference with their counterparts in the Joint Ministerial Monitoring Committee, which includes Algeria, Kazakhstan, Iraq, Nigeria and the UAE, according to a letter seen by Bloomberg. OPEC+, which includes 23 countries, made major production cuts at the height of the pandemic to offset the historic collapse in demand for black gold. The alliance had planned to ease some of the restrictions in early 2021 in anticipation of a global economic recovery, bringing about 1.9 million barrels per day, or about 2% of global consumption, back to market.

New wave of coronavirus darkens demand outlook

But the recent resurgence of the pandemic that has triggered further lockdowns and clouded the demand outlook for early next year is expected to delay this recovery in production. Especially since the increase in Libyan production is also contributing to concerns about oversupply. A member of the cartel, the country is exempt from oil cuts, but has added more than 1.1 million bpd to the market since early September.

“While a successful deployment of the vaccine should break the link between infection and mobility, even then global oil demand is unlikely to reach pre-pandemic levels until mid-year. 2022," said JP Morgan. “Despite the vaccine-driven rise in oil prices in recent weeks, short-term market fundamentals have weakened due to the reimposition of containment measures in Europe,” DNB Bank added. Thus, despite the sharp rebound in crude oil prices against a backdrop of good news on the development of anti-Covid19 vaccines and hopes of a certain 'return to normal', the balance on the black gold market still looks fragile.