Oil prices fell Monday through Wednesday this week then climbed back Thursday and Friday, largely the result of a contentious OPEC+ meeting. The original OPEC+ plan called for relaxing crude production cuts by 2 million bpd beginning in January. But the market remains oversupplied, and the COVID-19 pandemic is worsening in many key markets. OPEC+ reconvened on Thursday, and the group announced that it would bring an additional 500,000 bpd back to the market in January. The market accepted this as a reasonable compromise, and prices recovered on Thursday and today. Today, WTI crude futures prices opened at $45.64 a barrel, slightly down from last Friday’s opening price of $45.90 a barrel. The Monday-Wednesday price slump has largely been countered, and prices are little changed from last week. It is possible that the week may finish slightly in the black.

Markets had been climbing on the news about COVID-19 vaccine breakthroughs. Developers of three vaccines are seeking emergency approval for distribution and use. On Wednesday, the U.K. granted emergency authorization for the Pfizer-BioNTech vaccine, becoming the first Western country to begin inoculations. However, Pfizer announced that it would be forced to cut its expected production from 100 million doses this year to 50 million doses, citing unexpected difficulties in building an efficient supply chain. This caused a market pullback. The U.S. Food and Drug Administration (FDA) still is reviewing this vaccine, as well as the Moderna vaccine.

COVID-19 cases continue to surge, breaking new daily records and bringing over 1.2 million new cases in the U.S. in the past week. According to the COVID Tracking Project, new cases in the U.S. on Wednesday and Thursday broke new records, hitting 195,695 on Wednesday and 210,161 on Thursday. New cases have exceeded 100,000 per day for the past 30 consecutive days. Hospitalizations are at a record  100,667. This is the third, and worst, surge. The Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 stand at 65,220,557, with 1,506,251 deaths. This includes 14,139,577 cases in the U.S., with 276,325 deaths.

daily covid new cases

Source: COVID Tracking Projec

Initial weekly unemployment claims fell last week, though analysts noted that the numbers could be skewed by the Thanksgiving holiday. According to data collected by the Department of Labor, initial claims dropped by 75,000 during the week ended November 28, falling to a total of 712,000. The prior week’s figure was revised upward by 9,000 to a total of 787,000. Initial weekly claims had finally subsided below the one-million mark at the end of August, but they had been stuck stubbornly above 800,000 until the past six weeks. Prior to the pandemic, initial claims were typically 200,000–220,000 each week. During the 37 weeks since U.S. states began to issue shelter-in-place orders, more than 69.7 million Americans have filed initial jobless claims.

While initial weekly claims fell last week, November’s job formation was disappointing. The DOL’s Bureau of Labor Statistics released the November Jobs Report this morning. The BLS reported that total nonfarm payroll employment rose by 245,000 in November. According to the BLS, “However, the pace of improvement in the labor market has moderated in recent months. In November, notable job gains occurred in transportation and warehousing, professional and business services, and health care. Employment declined in government and retail trade.” November brought the lowest level of job formation since the COVID-19 economic recovery began, which raises a warning about the current surge and the slowdown in economic activity.

The worsening pandemic and disappointing Jobs Report may motivate congressional action to revive the delayed economic stimulus program.

WTI crude futures prices opened at $45.64 a barrel today, down by $0.26 a barrel (0.6%) from last Friday’s open of $45.90 a barrel. WTI futures prices declined Monday through Wednesday this week, as the OPEC+ Group failed to reach consensus on the future of production cuts. Thursday, prices recovered moderately when the group agreed to a more modest production increase for January than originally planned. WTI is trading in the range of $45.61-$46.68 a barrel currently. Prices may hold on for a finish slightly in the black. Our weekly price review covers hourly forward prices from Friday, November 27 through Friday, December 4. Three summary charts are followed by the Price Movers This Week briefing, which provides a more thorough review.

Source: Prices as reported by DTN Instant Market

Gasoline Prices

Gasoline futures prices opened at $1.2625 a gallon today on the NYMEX, compared with $1.2771 a gallon last Friday. This was a decline of 1.46 cents (1.1%.) U.S. average retail prices for gasoline rose by 1.8 cents to average $2.120/gallon during the week ended November 30. Retail prices reclaimed the territory above $2 per gallon during the first week of June. Gasoline futures prices are coming back from declines Monday-Wednesday. Contracts are trading in the range of $1.2592/gallon to $1.2880/gallon. The week appears to be heading for a finish slightly in the red, breaking a four-week upward climb. The latest price is $1.2640/gallon.

 

Source: Prices as reported by DTN Instant Market

Diesel Prices

Diesel opened on the NYMEX today at $1.3915/gallon, down slightly by 0.5 cents, or 0.4%, from last Friday’s open of $1.3965/gallon. This breaks a four-week upward price trend. U.S. average retail prices for diesel rose by 4.0 cents per gallon during the week ended November 30 to average $2.502/gallon. Diesel prices generally have weakened this year, missing some of the price recovery seen in crude and gasoline markets, until November brought four consecutive weeks of rising prices. Currently, diesel futures prices are recovering after sliding on Monday, Tuesday and Wednesday, leading to a weekly finish roughly unchanged from last week. Contracts are trading in the range of $1.3884-$1.4201/gallon. The latest price is $1.3947/gallon.

 

Source: Prices as reported by DTN Instant Market

WTI Crude Prices

WTI crude futures prices opened at $45.64 a barrel today, a decrease of $0.26 a barrel (0.6%) from last Friday’s open of $45.90 a barrel. Prices this week fell Monday through Wednesday then recovered Thursday and Friday, influenced by a contentious OPEC+ meeting that ultimately resulted in a compromise that will allow 0.5 mmbpd of crude back on the market in January, instead of the originally planned 2.0 mmbpd. The COVID-19 pandemic continues to worsen, threatening economic recovery. U.S. cases are surging faster than anywhere else in the world, with over 1.2 million new cases added in just the past week. The November Jobs Report was disappointing, but this may motivate congressional action on the long-delayed economic stimulus program. Futures contracts are trading in the range of $45.61-$46.68 a barrel currently. The week may hold on for a finish in the black, with the Monday-Wednesday decline counterbalanced by Thursday-Friday recovery. The latest price is $46.02 a barrel.

PRICE MOVERS THIS WEEK: FULL BRIEFING

Oil prices fell Monday through Wednesday this week then climbed back Thursday and Friday, largely the result of a contentious OPEC+ meeting. The original OPEC+ plan called for relaxing crude production cuts by 2 million bpd beginning in January. Oil prices have been rising over the past month, and there are hopes that the COVID-19 pandemic will be controlled in early 2021. But the market remains oversupplied, and the COVID-19 pandemic is worsening in many key markets. Saudi Arabia led a group advocating a continuation of the cuts, with Russia favoring adherence to the original plan. The group adjourned without consensus. OPEC+ reconvened on Thursday, and the group announced that it would bring an additional 500,000 bpd back to the market in January. Although Russia stated its belief that April would bring 2 million bpd back, the market accepted the 500,000-bpd increase as a reasonable compromise, and prices recovered on Thursday and today. Today, WTI crude futures prices opened at $45.64 a barrel, slightly down from last Friday’s opening price of $45.90 a barrel. Prices are up and down this morning, but it is possible that the week may finish slightly in the black.

Markets had been climbing on the news about COVID-19 vaccine breakthroughs. Developers of three vaccines are seeking emergency approval for distribution and use. On Wednesday, the U.K. granted emergency authorization for the Pfizer-BioNTech vaccine, becoming the first Western country to begin inoculations. However, Pfizer announced that it would be forced to cut its expected production from 100 million doses this year to 50 million doses, citing unexpected difficulties in building an efficient supply chain. This caused a market pullback. The U.S. Food and Drug Administration (FDA) still is reviewing this vaccine, as well as the Moderna vaccine. The FDA has a reputation of being cautious about approving new drugs, and indeed some U.S. health officials were critical of the U.K.’s fast-track approval.

COVID-19 cases continue to surge, breaking new daily records and bringing over 1.2 million new cases in the U.S. in the past week. According to the COVID Tracking Project, new cases in the U.S. on Wednesday and Thursday broke new records, hitting 195,695 on Wednesday and 210,161 on Thursday. New cases have exceeded 100,000 per day for the past 30 consecutive days. Hospitalizations are at a record 100,667. This is the third, and worst, surge. Late-April brought a peak of 35,958 new daily cases. Mid-July brought a second peak of 76,550 new daily cases. Health experts have warned that the promise of vaccines in the future should not be used as an excuse to let guards down, and now fear that the holiday season is spreading the infection. The Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 stand at 65,220,557, with 1,506,251 deaths. This includes 14,139,577 cases in the U.S., with 276,325 deaths.

daily covid new cases

Source: COVID Tracking Project

Initial weekly unemployment claims fell last week, though analysts noted that the numbers could be skewed by the Thanksgiving holiday. According to data collected by the Department of Labor, initial claims dropped by 75,000 during the week ended November 28, falling to a total of 712,000. The prior week’s figure was revised upward by 9,000 to a total of 787,000. Initial weekly claims had finally subsided below the one-million mark at the end of August, but they had been stuck stubbornly above 800,000 until the past six weeks. Prior to the pandemic, initial claims were typically 200,000–220,000 each week. During the week of March 28, initial jobless claims skyrocketed to hit a peak of 6,867,000. During the 37 weeks since U.S. states began to issue shelter-in-place orders, more than 69.7 million Americans have filed initial jobless claims.

While the initial weekly claims fell last week, November’s job formation was disappointing. This morning, the DOL’s Bureau of Labor Statistics released the November Employment Situation Report, also known as the Jobs Report. The BLS reported that total nonfarm payroll employment rose by 245,000 in November, and the unemployment rate declined to 6.7 percent. According to the BLS, “However, the pace of improvement in the labor market has moderated in recent months. In November, notable job gains occurred in transportation and warehousing, professional and business services, and health care. Employment declined in government and retail trade.” November brought the lowest level of job formation since the COVID-19 economic recovery began, which raises a warning about the current surge and the slowdown in economic activity.

The worsening pandemic and disappointing Jobs Report may motivate congressional action to revive the delayed economic stimulus program.

The U.S. Energy Information Administration (EIA) published official inventory data for the week ended November 27. The EIA reported a small drawdown of 0.679 million barrels (mmbbls) from crude oil inventories, heavily outweighed by additions of 3.491 mmbbls to gasoline inventories plus an addition of 3.238 mmbbls to diesel inventories. The EIA net result was an inventory build of 6.05 mmbbls.

During the worst of the oversupply, the EIA reported that crude oil in storage at Cushing rose from 35,501 barrels during the week ended January 3, 2020, to 65,446 barrels during the week ended May 1, 2020, an increase of 29,124 barrels. Cushing stocks fell to 45,582 mmbbls during the week ended June 26. However, the downward trend was reversed in July through early August, sending Cushing stocks back up to 53,289 mmbbls during the week ended August 7. Cushing stocks have trended up this autumn. The current week ended November 27 showed Cushing crude stocks at 59,575 mmbbls.

During the week ended November 27, U.S. crude production rose by 0.1 mmbpd to reach 11.1 mmbpd. According to the EIA, U.S. crude production averaged 13.025 mmbpd in February, the highest total ever. The COVID-19 pandemic forced prices down. U.S. production fell to 12.25 mmbpd in April, 11.52 mmbpd in May, and 10.9 mmbpd in June. Production in July rose to an average of 11.04 mmbpd. In August, however, production fell to an average of 10.475 mmbpd before rising to 10.575 mmbpd in September. October production averaged 10.6 mmbpd, and November production averaged 10.875 mmbpd. Along with impacts caused by the pandemic, this year’s production has varied because of record-breaking hurricanes, including Hurricanes Laura, Marco, and Zeta. So far this year, 30 named storms have formed over the Atlantic, breaking the last record of 28 storms in 2005, and making the year 2020 Atlantic hurricane season the most active one in recorded history.