U.S. light crude (WTI) rose further with a gain of 3 percent to $41.34 per barrel after a recovery of nearly 12 percent since start of the month. The Brent’s January contract rose 2.4 percent to $43.82. The price of Brent crude oil has been set above the $43.5 mark, which is a signal for the upward trend to begin.
Support for oil prices was provided by news of the positive results of the Moderna Inc (MRNA) coronavirus vaccine tests, which showed 94.5% efficacy.
Moreover the expectations of market participants that OPEC+ will extend current oil productions quotas for at least the first quarter of 2021 lead to the growth of black gold stocks. A meeting of the ministerial committee of the organization will be held today, after which potential future steps of the organization can be described in terms of market balancing. Distribution concerns are also likely to be addressed today, as at the end of October, the transaction execution rate was just 96 percent.
At the same time there are some medium term supply-side threats to the oil market. Thus, production levels in Libya have surpassed the pre-war blockade average of 1.2 million barrels per day, a very large amount for the world market. The oversupply factor can put some pressure on oil prices before coronavirus vaccines are accessible to the general public.
Moreover, in the United States, where the number of active rigs has risen for eight consecutive weeks, the growth of operation in the oil industry is also observed. In view of the difficult pandemic situation in the United States, an increase in production could lead in the coming months to the accumulation of reserves in oil storage facilities, which could also have a negative effect on oil prices.
Gold prices are adding 0.15 percent at last check and are at $1885.10 per Troy ounce. Gold prices continue to consolidate below the level of $1,900, which is close to the moving average 50-day line as well.