Analysts: The second wave of the epidemic imposes itself on the global economy and puts pressure on energy markets

Oil analysts expected that crude oil prices will tend to rise this week, following previous weekly gains in which Brent rose 0.2 per cent and US crude 0.7 per cent.

They indicated that the rises may be supported by the meeting of the Ministerial Committee in OPEC+ to monitor production cuts, which will assess the status of compliance with production cuts and the extent of producers' compliance with production quotas, according to the agreement of last May, and will also give indications of the path of cuts in the next year.

Analysts explained that price hikes will remain limited in light of the sharp downward pressures that curb the rise in prices, due to rapid infections with the coronavirus in the United States, Europe and many countries of the world, which deepens fears of a global economic slowdown and the continued suffering of demand for crude oil and fuel, especially with many trends From countries towards implementing the second lockdown.

They stated that the pandemic is causing widespread suffering in terms of unemployment, noting in statements that the lost oil jobs are not returning, and more than ten thousand oil and gas jobs have been canceled in the United States between March and August of This year, 70 percent of it will not return - according to a study by Deloitte International - and in return, the development of green energy will create greater opportunities for investment in renewable energy sources.

In this context, Ross Kennedy, managing director of "QHi" energy services company, says that the meeting of "OPEC+" producers in a new monthly meeting to monitor production cuts may give some momentum to prices, especially if the committee recommends maintaining production cuts in the year. Next, the pressure continues with less committed producers.

He explained that the acceleration of new infections in the pandemic dispels any opportunity to maintain successive price gains, as the downward pressure on prices remains the most dominating the market, especially with the increase in epidemic cases in both the United States and across Europe as hopes for a rapid recovery in oil demand diminish.

For his part, Damir Tsprat, Director of Business Development at Technic Group, believes that the second wave of the epidemic is imposing itself on the economies of the United States and Europe and making the decline in prices a dominant feature of the market, but there is also a good impact on the decisions of producers, especially if the recommendation is to move away from additions. Productivity planned at the beginning of the new year to contain the situation of weak demand.

He pointed out that "OPEC+" used to provide good reassurances to the market, and there is indeed a state of confidence that achieves relatively stable prices, pointing to the market’s conviction that OPEC+ will not let oil prices collapse again, referring to the words of Mohammed Barkindo, Secretary General of OPEC that OPEC's partnership with OPEC+ will continue to do everything positive and supportive of stability, especially ensuring that there is no setback and preventing a recurrence of the historic collapse that we witnessed last April.

Peter Bakher, an economic analyst and legal affairs specialist for energy, says that OPEC+, as our return, is focusing on maintaining its cohesion, which will become clearer in today's meeting, which comes at a precise time from the concerns surrounding the global economy and the tremendous pressure on demand, pointing out that OPEC+ sets its sights on avoiding a new slippage in prices, containing any internal tensions, and dealing patiently with some producers who fail to achieve the goals of the production cut agreement, which was clearly demonstrated in the record of success last month represented in the commitment to OPEC production cuts of about 100 per cent. 

He added that the market situation is still fragile, especially with the worsening of the pandemic situation, which was confirmed by the International Energy Agency in its latest report, as it alerted that the high cases of coronavirus infection in many parts of the world certainly raises doubts about the strength of the expected economic recovery and thus the potential growth of demand on oil.

In turn, Arfi Nahar, a specialist in oil and gas affairs at the international "African Leadership," says that US production, especially from shale oil, is facing an unprecedented contraction and may not return to pre-pandemic levels, according to a report by Occidental, which is likely to be production. American oil has already peaked, indicating that US production has already lost more than two million barrels per day and is difficult to recover.

Arfi Nahar indicated that US production is not the only one that has contracted due to unfavorable market conditions, as international statistics indicate that a significant decrease in drilling operations in Russia is expected in the next year as drilling activities have actually decreased, and the decline may reach about 20 percent in 2021.