Demand concerns were already on the rise and the last thing crude oil bulls were expecting to hear was another rollover of the current policy from the OPEC+ group. Yet contrary to some expectations for only a moderate hike or no hike at all for January, that’s exactly what happened. So, the OPEC+ will raise output by another 400K barrels per day, adding more oil to the global supply and thus completely removing the threat of supply shortages at a time when demand is expected to fall.

Indeed, crude oil prices were coming under renewed pressure ever since yesterday afternoon when the first case of the new variant was detected in the US. But in light of the OPEC+ decision, they have just hit fresh weekly lows, with WTI slipping to $63 and Brent $66 – both at their weakest levels since August.

Still, the OPEC+ has now stated that it may adjust future production plans if the market changes. So, I suppose it all now depends on Covid and lockdowns. If the situation deteriorates then the OPEC+ will stop further production hikes, possibly as early as their next meet on January 4th. Otherwise, the current policy may rollover as planned.

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Originally Appeared Here