Oil futures displayed a neutral pattern on Friday, November 20, after dipping under 0.3 percent the day before. The December Nymex contracts advanced 1 percent to $42.15 per barrel at close of the week.
The optimism over vaccination has now faded, and the focus of market investors has turned to talks in the U.S. Congress between Republicans and Democrats for a proposed fiscal stimulus plan. The U.S. economy and, ultimately, the market for energy resources could be helped by additional public and business funding from the government. There has been little progress in the negotiating process at the moment, but this subject is likely to become one of the main issues in the near future.
The threats to the oil market from the demand side, however, continue to be very strong. Despite restrictive measures in a number of key countries, the incidence of coronavirus infections worldwide continues to increase. In this regard, there are fears in the markets that the pandemic situation will not be brought under control until the mass delivery of the vaccine, and that oil demand will remain under pressure until that time.
Moreover the reduction of the oil market deficit is delayed by the rise in production in Libya, which currently produces 1.25 million barrels a day. At the same time the country declared that it would not join the OPEC+ agreement to restrict production until it hit a level of production of 1.7 million barrels per day. It is clear that such actions by Libya could significantly reduce the effectiveness of ongoing efforts by OPEC+ member countries to stabilize the market and could put pressure on oil prices.
Regarding the statistics on the oil market, the weekly data on the number of active drilling rigs in the United States by the American oilfield services company Baker Hughes is important. Last week the measure increased by 10 units to 236 units in the country.
The price of Brent crude oil continues to consolidate above the $43.5 mark, which could be a sign for the upward trend to continue. Futures for oil reveal a neutral trend in trading on Friday, while the price of non-ferrous metals on the LME increased.
Gold prices added 0.6 percent on Friday to end the week at $1872.40 per Troy ounce. The gold price rebounded from the lower end of the range of $1850-1900.