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SINGAPORE – Oil prices fell on Monday, the first day of negotiations in 2021, before a meeting of OPEC and allied producers to discuss production levels for February, fearing that demand in the first half will seep into the market while the coronavirus pandemic continues.
Brent crude for March was at $ 51.76 a barrel, down 4 cents or 0.08%, by 0038 GMT, while US West Texas Intermediate crude for February fell 9 cents, or 0.2%, to $ 48.43 a barrel.
Mohammad Barkindo, secretary-general of the Organization of Petroleum Exporting Countries (OPEC), said on Sunday that while demand for oil is expected to increase 5.9 million barrels per day (bpd) to 95.9 million bpd this year, the group sees many downside demand risks in the first half of 2021.
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“We are just beginning to emerge from a year of deep investment cuts, huge job losses and the worst destruction of crude oil demand on record,” he said.
Oil prices fell on Monday, the first day of negotiations in 2021, before a meeting of OPEC and allied producers to discuss production levels for February, with fears that demand in the first half will seep into the market as the coronavirus pandemic continues. Photograph (Jason Alden / Bloomberg via Getty Images)
Prices ended 2020 about 20% below the 2019 average, still recovering from the impact of the global economic blockade measures imposed to combat COVID-19, which cut fuel demand, although major world producers have agreed to record cuts in production throughout the year.
OPEC and allied producers, including Russia, a group known as OPEC +, decided at a meeting last month to increase production by 500,000 barrels a day in January, anticipating an increase in demand, and agreed to meet every month to review production.
Analysts at Energy Aspects and RBC Capital said OPEC + is likely to maintain production levels for January in February.
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“We believe the group of producers will choose to forgo any additional production increases for February with the cases of COVID-19 continuing to rise and the vaccine launch slower than expected,” said Helima Croft of RBC Capital.
In the United States, crude oil production came under pressure from weak prices and lukewarm demand, down more than 2 million barrels per day (bpd) in October from the beginning of this year, revealed a government report on January 1 .