Oil prices were little changed on Tuesday as worries that new coronavirus lockdowns could hit demand offset hopes for a vaccine and the possibility of tighter OPEC+ supply policies.
Brent futures fell 7 cents, or 0.2%, to settle at $43.75 a barrel, while U.S. crude gained 9 cents, or 0.2%, to settle at $41.43.
Crude prices pared losses after the Pentagon said President Donald Trump will sharply reduce the number of U.S. forces in Afghanistan from 4,500 to 2,500 before he leaves office.
“Crude prices rallied (from negative to little changed) after the Trump administration announced further drawdown of troops in Afghanistan and Iraq,” said Edward Moya, senior market analyst at OANDA in New York, noting instability in the region is a growing concern for some top military advisers and the oil market.
Those price moves came shortly ahead of data from the American Petroleum Institute, an industry group, that is expected to show U.S. crude inventories rose 1.7 million barrels last week, according to a Reuters poll.
On Monday, Brent closed at a 10-week high following Moderna Inc’s announcement that its coronavirus vaccine was 94.5% effective. That followed similar news from Pfizer Inc last week.
The short-term economic outlook remained hazy with several European nations tightening restrictions as coronavirus cases increase.
To tackle weaker energy demand amid a wave of new coronavirus cases, Saudi Arabia called on fellow OPEC+ members to be flexible in responding to oil market needs as it builds the case for a tighter production policy in 2021.
OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, lowered its outlook on oil demand growth for 2021, according to a confidential document seen by Reuters.
An option gaining support among OPEC+ nations is to keep the existing cuts of 7.7 million barrels per day (bpd) for a further three to six months, sources said, rather than tapering the reduction to 5.7 million bpd in January.
OPEC+ held a ministerial committee meeting on Tuesday that made no formal recommendation. The group will hold a full meeting on Nov. 30-Dec. 1.
“The lack of a recommendation forces the market to wait for the next episode of this saga before feeling comfortable again,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, noting “we are in for a multi-month supply glut” if OPEC+ increases output from January.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.