Crude futures rangebound as pandemic concerns offset stimulus talk resumption

Singapore — 0245 GMT: Crude oil futures remained rangebound during morning trade in Asia Nov. 20, as the announcement of a resumption of US stimulus talks failed to assuage concerns over rising COVID-19 infection numbers.

At 10:45 am Singapore time (0245 GMT), ICE Brent January crude futures were up 5 cents/b (0.11%) from the Nov. 19 settle at $44.25/b, while the NYMEX December light sweet crude contract was down 1 cent/b (0.02%) at $41.73/b.

The ICE Brent January contract and the December WTI contract had edged 0.32% and 0.19% lower to settle at $44.20/b and $41.74/b, respectively, on Nov. 19, after the closure of public schools in New York City and with EIA data showing a build in US commercial crude and gasoline inventories.

Market analysts had expected some upside to crude prices this morning, after US Senate Minority Leader Chuck Schumer said that the Congress was going to restart talks on a COVID-19 stimulus bill, especially since fiscal relief is expected to revitalize the economy and shore up energy demand.

However, this news failed to galvanize the market, which remained concerned over the the unimpeded spread of the coronavirus pandemic. These concerns only heightened after California enacted a late-night curfew in 41 of its counties.

"There is concern over the escalation of the pandemic in the US and that is really starting to weigh down on traders," David Lennox, Resource Analyst at Fat Prophets, told S&P Global Platts Nov. 20.

"News of stimulus talks did little because with the focus on the pandemic, any good news will have to be really good news in order to support the market because we know that if the US starts to shut down again, there will be a significant impact on the demand for oil."

Looking at upcoming events that can shape the trajectory of oil prices, Lennox said: "There is no doubt that the market is now looking forward to the OPEC and non-OPEC Ministerial Meeting for clarity over the alliance's production plan going forward."

Some market analysts Platts spoke with said they expect a three to six month extension of the current 7.7 million b/d production cut. Others, however, spurred on by hints given by key figures within OPEC+, are hopeful that the alliance may even deepen current cuts in an attempt to boost the oil market amid the demand-side gloom cast by the coronavirus pandemic.