Oil fluctuated near $41 a barrel as the dollar fell and traders weighed the potential for OPEC+ to delay a planned easing of output cuts.
While headline prices have gained on the growing prospect of an effective Covid-19 vaccine in recent days, an OPEC+ panel said the group, which meets again on Tuesday, should consider holding off on easing bumper production curbs by three to six months.
The producer alliance is wrestling with a bifurcated demand outlook. In Asia, where consumption has recovered strongly from Covid-19, refiners have been snapping up barrels from the Middle East, U.S. and Russia. The structure of Oman futures on the Dubai Mercantile Exchange has surged into a bullish backwardation -- indicating tight supplies -- in recent days, as strength in the region’s crude market has grown.
But in Europe and the U.S., it’s a different picture. Covid-19 cases are growing and movement indicators have been declining, particularly in Europe. With OPEC+ balancing those concerns against resurgent Asian demand, a technical committee said the group should delay an output hike of almost 2 million barrels a day in January.
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