Beware oil rallies bearing gifts
Oil prices have hitched a ride aboard the Biden bandwagon this morning, after enduring a torrid session on Friday. Both Brent crude and WTI have erased the losses of Friday. Brent crude and WTI have leapt 2.15% to USD40.50 and USD38.20 a barrel respectively. Despite the rallies this morning, in the bigger picture, prices have only moved to the middle of their respective two-month ranges.
Although OPEC+ will be relieved, caution should be exercised about oil rallies bearing gifts. Libyan production has returned to 1 million barrels per day (they are exempted from the OPEC+ cuts), and a Biden presidency may be more conciliatory towards Iran. An increase in Iranian oil to international markets would undoubtedly be a negative price development.
Even without that theory, the US and Europe are facing renewed slowdowns inactivity, and therefore consumption, due to the Covid-19 pandemic. National lockdowns in Europe, […]
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