Oil prices edged lower on Monday, the first working day of 2021 trading, ahead of a meeting of OPEC and allied producers to discuss output levels for February with fears for first-half demand seeping into the market as the coronavirus pandemic lingers.
Brent crude for March was at $51.76 a barrel, down 4 cents or 0.08%, by 0038 GMT while U.S. 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 the Petroleum Exporting Countries (OPEC), said on Sunday that while crude demand is expected to rise by 5.9 million barrels per day (bpd) to 95.9 million bpd this year, the group sees plenty of downside demand risks in the first half of 2021.
“We are only beginning to emerge from a year of deep investment cuts, huge job losses and the worst crude oil demand destruction on record,” he said.
Prices ended 2020 about 20% below 2019’s average, still recovering from the impact of global economic lockdown measures imposed to battle COVID-19 that slashed fuel demand, even though the world’s major producers agreed record output cuts through the year.
OPEC and allied producers including Russia, a grouping known as OPEC+, decided at a meeting last month to raise output by 500,000 barrels per day in January, anticipating a boost in demand, and agreed to meet every month to review production.
Analysts from Energy Aspects and RBC Capital said OPEC+ was likely to maintain January production levels in February.
“We think the producer group will opt to forgo any further production increases for February with COVID-19 cases continuing to climb and the slower-than-expected vaccine rollout,” RBC Capital’s Helima Croft said.
According to Reuters, in the United States, crude oil production stayed under pressure from weak prices and tepid demand, down more than 2 million barrels per day (bpd) in October from earlier this year, a government report showed on January 1, 2021.
