Crude oil prices, which soared in November on vaccine hopes, fell on Monday amid investor tensions before the pobability of the producer group OPEC and its allies’ decision whether to extend production cuts to stabilize global markets.
January Brent crude futures, which will expire later on Monday, dropped 46 cents, or 1%, to $47.72 a barrel by 0355 GMT. The more actively traded February Brent contract was at $47.83 a barrel, down 42 cents.
West Texas Intermediate (WTI) crude futures for January fell 48 cents, or 1.1%, to $45.05 a barrel.
However, both benchmarks saw an increase of more than 20% in November, the strongest monthly gain since May with three promising coronavirus vaccines supporting hopes for limiting the spread of the disease.
Analysts and traders also expect, from OPEC and its allies, including Russia that the planned increase in oil production in next year to be delayed as the second wave of COVID-19 drops global fuel demand.
Sources say the group held their first round of talks on Sunday, but no consensus has yet been reached on the 2021 oil production policy ahead of key meetings on Monday and Tuesday. Monday’s meeting starts at 1300 GMT.
The extension represents a disadvantage of about $ 5 per barrel from current spot levels and will likely contribute more to short-term price fluctuations.
The winter infection wave is expected to reduce global oil demand by 3 million barrels a day, which is predicted to be partially offset by warming and restock demand in Asia.
It is estimated that the oil market surplus could rise to between 1.5 million and 3 million barrels in the first half of 2021 if OPEC + does not extend cuts.
Increasing tensions in the Middle East at the weekend, such as the killing of Iran’s nuclear scientist, the rocket attack on the oil refinery in northern Iraq, have raised oil prices.
In the United States, the number of operating oil and gas rigs increased for the fourth month in a row, with crude oil prices mostly trading above $ 40 since mid-June.
China, the world’s second-largest economy and largest oil importer, expanded factory operations at the fastest speed in more than three years in November and is on track to become the first major economy to fully recover from the coronavirus crisis.