Oil Price Fundamental Daily Forecast – Weakness Driven by Fuel-Demand Recovery Concerns

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sideways-to-lower on Tuesday, weighed down by worries that the fast-spreading strain of coronavirus in the United Kingdom could slow the fuel-demand recovery.

Detection of the new strain prompted several countries to close their borders to Britain, though a British minister said the U.K. and France are working to reopen one of Europe’s most important trade routes.

At 14:15 GMT, February WTI crude oil is at $47.20, down $0.77 or -1.61% and February Brent crude oil is trading $50.21, down $0.70 or -1.37%.

Both benchmarks slid nearly 3% on Monday, partly erasing recent gains driven by the rollout of COVID-19 vaccines, seen as key to allowing a return to normal life.

Oil gained support from U.S. Congress approval of an $892 billion coronavirus aid package after months of inaction.

China’s 2020 Crude Oil Production to Reach 3.87 Mln Bpd – Energy Chief

China’s crude oil production in 2020 is set to reach 194 million tonnes, equivalent to 3.87 million barrels per day, the director of the country’s National Energy Administration (NEA) was reported as saying by the official Xinhua news agency on Tuesday.

That would represent a second straight year-on-year rise, a 1.6% increase on the 191.01 million tonnes China produced in 2019 and the highest annual output total since 2016, according to data from the National Bureau of Statistics.

The increase comes following a jump in output from the onshore Changqing and Tarim oilfields, as well as in Bohai Bay, NEA Director Zhang Jianhua said.

China, the world’s biggest energy consumer, was also its sixth-biggest oil producer in 2019, according to the International Energy Agency.

Iran Sees Russia as ‘Strategic Partner’, Views Close within OPEC+, Zanganeh Says

Iran sees Russia as a “strategic partner” and the two countries share close views within the OPEC+ alliance, Oil Minister Bijan Zanganeh was quoted by the Iranian oil ministry’s news agency SHANA as saying in Moscow on Monday.

“We see Russia as a strategic partner and this partnership will not change with the warm and cold atmosphere in the international arena…The views of both sides were close in talks (about OPEC+ cooperation), Zanganeh said after meeting Russian Deputy Minister Alexander Novak, SHANA reported.

Short-Term Outlook

Later today at 21:30, the focus will be on the latest U.S. inventory reports from the American Petroleum Institute (API). The report is expected to show crude stocks fell by 3.3 million barrels.

In other news, OPEC+ is set to boost output by 500,000 barrels per day in January. There is no sign yet of any wavering induced by the price drop.

For a look at all of today’s economic events, check out our economic calendar.