(Bloomberg) -- Crude slipped as investors ignored a broader market surge that pushed equities to record highs and focused instead on looming new supply from OPEC+.
Futures in New York fell 1.3% on Monday in the wake of thin trading volumes. Russia’s deputy prime minister said the nation plans to support a further gradual increase in OPEC+ production at the group’s next meeting in January because crude prices are within an optimal range. The alliance already plans to return 500,000 barrels a day of output to the market from next month.
Equity markets advanced after U.S. President Donald Trump signed a bill containing $900 billion in pandemic relief, which also bodes well for oil consumption in 2021. But rising worldwide coronavirus infections, and related travel curbs, are weighing on the short-term demand outlook.
“There are headwinds for upward price improvement as the market is readying for OPEC to go ahead and put more barrels on the market,” said John Kilduff, a partner at Again Capital LLC.
Crude’s shaky start to the week reflects the concern over additional movement restrictions as the new mutation in the coronavirus spreads globally. Russia extended a ban on flights from the U.K., and Spaniards are being told not to travel between regions and to avoid gatherings of more than 10 people over the holiday season.
As OPEC+ prepares to meet next week, traders are looking out for indications of changing sentiment among its members on their previously agreed cuts. Over the long term, Iranian plans to hike oil production in 2021 continue to weigh on the market and threaten to undermine the group’s efforts to ramp up output while avoiding flooding the market.
“OPEC+ can’t wait, particularly Russia and even Iraq, to pump more barrels,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC. “They want things to go back to normal, so there’s more risk to downside than upside.”
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