Mid-Week Review – December 1, 2021
OPEC+ Under Pressure As Oil Prices Plunge Again
Black Friday’s price collapse shook the oil market, destroying the bullish sentiment that had been building throughout the month. While prices partially recovered on Monday, they plunged again on Tuesday morning as uncertainty intensified. Concerns over the rapid spread of the Omicron variant have bolstered fears of demand destruction. Everyone is now focused on the upcoming OPEC+ meeting as the potential loss of 2-3 million b/d of global demand could convince the cartel to halt its 400,000 b/d monthly production additions.
Oil may hit $150 and a surge could ‘definitely escalate an inflation scare,’ says Jefferies
Oil prices could move “a lot higher” from current levels given the world’s deep reliance on fossil fuels and may hit $150, says Christopher Wood from Jefferies. “In a world that really reopens — which is a big ‘if’ — the oil price can go significantly higher,” Wood, global head of equity strategy at the investment bank, told CNBC’s “Street Signs Asia” on Wednesday.
Oil prices rally ahead of OPEC meeting despite Omicron concerns
Oil prices rallied on Wednesday after recent sharp drops as major producers started to discuss future output against the backdrop of the Omicron variant of the coronavirus triggering fresh travel restrictions which could dampen oil demand. Equity markets, which often move in tandem with oil prices also rebounded as investors bought the previous session’s dip in the hope that Omicron would not derail an economic recovery.
U.S. Moves to Cool Tensions With Saudis Over Oil Prices
The U.S. is trying to re-focus its energy relationship with top Middle East OPEC countries, notably Saudi Arabia, after a period of tension between Washington and Riyadh over high oil prices. Amos Hochstein, the top American energy diplomat, held meetings this week with officials in the Middle East, including Saudi Energy Minister Prince Abdulaziz bin Salman on Tuesday.
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