By Alex Longley
The shaky demand picture poses a challenge to the Organization of Petroleum Exporting Countries and its allies as they struggle to manage the market. The United Arab Emirates tried to ease a spat with its OPEC+ partners on Thursday, after officials privately questioned the benefit of its membership of the group.
Oil is still up 3.4% this week amid vaccine developments and a demand rebound in Asia, with China seeing the first draw of its implied crude inventory in three years and Russian crude trading almost $3 higher than the Dubai benchmark. However, a resurgent coronavirus in the U.S. and Europe is sapping fuel consumption there and the International Monetary Fund warned the global economic recovery may be fading.
“Despite the good news on the medical front, it will take several months to see any real effect in global economies,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy AS. “As the world awaits, locked-down to halt the growth of infection rates, oil demand will get worse before it gets better.”
With demand under pressure in Europe, the region’s gasoline crack turned negative for the first time in months on Thursday, while its American equivalent closed at the lowest since April on Wednesday. Only 35% of Americans will be taking to the roads this year during the Thanksgiving holiday, compared with 65% last year, according to retail fuel tracker GasBuddy.