Oil prices fall back on tightening restrictions despite OPEC+ hopes

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Oil prices eased on Tuesday as worries about the short-term impact on demand of a new surge in the coronavirus pandemic outweighed hopes for a vaccine and tighter OPEC+ supply policy.

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Brent was down 29 cents, or 0.6 percent, at $43.53 a barrel by 1444 GMT while US crude was down 27 cents, or 0.6 percent, at $41.07. Both had been up 40 cents earlier in the session.

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“Developments with regards to a vaccine are constructive for oil demand in the medium to long term. However, for the near term it changes little, with still plenty of concern over the demand impact from the latest wave of COVID-19,” said ING commodity strategist Warren Patterson.

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Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman called on fellow OPEC+ members on Tuesday to be flexible in responding to oil market needs as the kingdom builds the case for a tighter oil production policy in 2021.

OPEC+, which groups the Organization of the Petroleum Exporting Countries, Russia and others, held a ministerial committee meeting on Tuesday that could recommend that producers change quotas for next year.

OPEC+, which holds a full meeting of ministers on November 30 and December 1, has lowered its outlook on oil demand growth for 2021, a confidential document seen by Reuters shows, supporting the case for a tighter policy on output next year.

Russia said it would stick to its deal with OPEC.

Oil prices rose more than 10 percent since last week’s announcement by Pfizer that its COVID-19 vaccine was more than 90 percent effective and made further gains on Monday when Moderna said its vaccine was 94.5 percent effective.

But the short-term economic outlook remains hazy as the grip of the virus grows stronger, with several European nations tightening restrictions on their populations.

In China, however, crude oil throughput in October rose to its highest level, underpinning a fast demand recovery.

“Oil demand in China is exceeding pre-COVID-19 levels which suggests oil demand is not permanently impaired,” analysts from Bernstein Energy said, saying this supported data indicating “oil demand has not been structurally damaged” by the pandemic.

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