WTI crude closed slightly higher yesterday on the hopes of OPEC+ balancing the market and the continuation of the rally from coronavirus vaccine news. This morning, however, the market is feeling downward pressure from mounting coronavirus infections and deaths and rumors of the UAE considering leaving OPEC.
The US has surpassed a grim milestone of over 250,000 deaths due to the coronavirus. Infectious-disease experts estimate, “more than 3 million people in the United States are infected with the coronavirus, the equivalent of about 1 percent of the population.” More than 11.5 million cases have been reported nationwide since February, according to data tracked by The Washington Post. With coronavirus surging in the US, many cities and states are increasing restrictions and lockdowns to curb the tide of infections. This second wave of lockdowns is causing concern of a slowing economic recovery and decreasing demand for fuel – putting a cap on the recent vaccine-related rally.
In OPEC news, rumors are swirling that the UAE is weighing the pros and cons of staying with the OPEC group. The UAE is the fourth largest producer in OPEC producing 3.1 MMbpd. They signalled some dissatisfaction with considering extending cuts when some members were not in compliance with previous and current supply cuts. Should the UAE leave OPEC, it would be a blow to the organization, and it is possible that others may follow. If members leave OPEC, it would be more difficult for the group to balance the market and to keep prices elevated. Qatar was the first Arab state to leave OPEC – they left in January 2019 to focus on natural gas production.
Crude prices are down this morning. WTI Crude is trading at $41.59, a loss of 23 cents.
Fuel is mixed in early trading this morning. Diesel is trading at $1.2695, a gain of 0.6 cents. Gasoline is trading at $1.1534, a decrease of 1.0 cents.