Oil prices were relatively stable despite increasing pessimism and skepticism about the slow pace of the oil demand recovery. By the end of the week, prices had settled near the levels of a week earlier. Brent crude edged higher to $42.93 per barrel while WTI crude also ticked up to $40.88 per barrel. The spread between the pair narrowed to $2.05 per barrel.
The news of the week would in other circumstances have sent the price tumbling as a second wave of the virus in Europe triggered stronger distancing measures.
However the continuing efforts of OPEC+ producers helped to alleviate the downward pressure on prices despite some speculation that cohesion within the group was starting to fray ahead of the upcoming OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting this week.
It will assess oil market conditions and output cuts compliance ahead of the OPEC+ meeting scheduled for the end of November.
That gathering will decide whether to ease the existing 7.7 million bpd of output cuts to 5.7 million bpd from January 2021 onward (as already agreed in April) or to keep the output cuts unchanged because of rising inventories levels.
Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin had a phone conversation to assess current market conditions ahead of the next meeting and to emphasize continued cooperation between the countries.
Such cooperation has been extremely effective thus far in stabilizing oil markets during a frenetic period for the global economy.
The partnership between producers from inside and outside OPEC — a partnership in which the Kingdom and Russia played a leadership role — has been a big confidence booster for energy markets.
US crude oil exports hit a 14-month-low amid weak export demand, declining to 2.1 million bpd, which is alarmingly close to the levels of August 2019.
It suggests that US crude oil exports will further drop next year if prices fail to rise above close to the $40 mark and if the pandemic continues to cripple economies, which could lead to an oil surplus next year.
The latest EIA data showed that US crude oil inventories have dropped by 3.82 million barrels but still remain about 10 percent above the five-year average.