Oil was mixed Friday morning in Asia, as investors digested Saudi Arabia’s defense of the Organization of the Petroleum Exporting Countries and allies (OPEC+) plans to increase output capping gains.
Saudi energy minister Prince Abdulaziz bin Salman said that he saw nothing yet in the market “that disturbs us,” in an interview on Thursday, adding that OPEC+ was nimble enough to change course if necessary. The cartel will continue to meet monthly to discuss output levels.
Although investors are optimistic that global oil inventories will continue falling as the economic recovery from COVID-19 picks up speed and demand for fuel increases, continuous outbreaks of COVID-19 cases globally and the ensuing restrictive measures are curbing some investors’ enthusiasm.
A slower-than-expected vaccine rollout globally is also hampering the recovery and increasing doubts about fuel demand recovery in turn.
Oil prices are expected to trade in a range between $60 and $70 as investors weigh all these factors, Axi chief global markets strategist Stephen Innes told Reuters. The sudden calm and drop in volatility in oil markets have attracted passive investors as prompt intermonth spreads have widened in backwardation, he added.
With Brent futures currently in a backwardated market, front-month prices will be higher than those in future months, implying tighter supplies.