By Geoffrey Smith
Investing.com -- Crude oil prices fell on Monday as the market’s focus reverted to the demand outlook for next year after the Organization of Petroleum Exporting Countries and Russia tied up most of the questions hanging over supply issues at their meeting last week.
By 11:15 AM ET (1615 GMT), U.S. Crude futures were down 0.6% at $46.03 a barrel, while Brent futures, the international benchmark, were down 0.4% at $49.04 a barrel.
U.S. Gasoline RBOB prices were down 0.5% at $1.2625 a gallon.
Gasoline prices came under pressure after Reuters cited data from IHS Markit subsidiary OPIS showing that U.S. consumption over the Thanksgiving week fell to its lowest in over 20 years. The Center for Disease Control had advised Americans not to travel home for the holiday, but anecdotal data had still indicated a heavy week for traffic.
OPIS said that demand for motor fuel was down over 19% from a year earlier during the holiday week, while sales of gasoline fell 8.4% from the previous week. It warned that demand could soften even further before the year-end, against a background of spreading restrictions on business and social life. California, notably, ordered most of its citizens to stay home wherever possible at the weekend, as free capacity in its intensive care units ran scarce due to record high admissions of patients with Covid-19.
“We’re heading toward a 90-day period where gasoline demand gets further crimped by winter weather and post-holiday cocooning,” Reuters quoted Tom Kloza, executive director at IHS Markit and a veteran analyst of North American fuel trends as saying. “By January, we may regularly see demand numbers not witnessed since the last century.”
Dr. Anthony Fauci, head of the National Institute for Allergy and Infectious Diseases, told CNN on Monday that the Christmas holiday could prove to be an even bigger challenge than Thanksgiving, given the continued spread of the disease.
The international picture for demand is, however, brighter. Chinese customs data released on Monday showed increased imports of crude as refiners again took advantage of a dip in prices due to weaker western demand. China imported an average of 11.3 million barrels a day in the month, up over 9% from a year earlier but still below the volumes seen in spring and early summer, when importers gorged themselves on a world glut.
In addition to demand worries, some are also focusing on the risk that Iran will be able to increase supplies to the world next year if President-elect lifts sanctions and returns the U.S. to the UN-sponsored deal limiting Iran's nuclear program. Some analysts argue that Iran could raise exports by 1.2 million barrels a day - a development that the recently-reviewed OPEC+ accord on output levels doesn't take into account.