Meanwhile, OPEC will resume discussions on Tuesday: File Image/Pixabay
The failure of the Organization of the Petroleum Exporting Countries (OPEC) on Monday to decide whether to increase output in February had a negative effect on crude traders, who caused oil prices to dip by almost 2 percent.
However, the cartel agreed to meet again on Tuesday to discuss the matter, which along with the Covid vaccines is said to be a key component of the commodity's recovery in the new year.
Brent on Monday settled 71 cents, or 1.4 percent, lower at $51.09 per barrel, while West Texas Intermediate crude fell 90 cents, or 1.9 percent, to settle at $47.62; the losses were minimized when Iran's Revolutionary Guards seized a South Korean-flagged tanker in Gulf waters, and the Islamic republic resumed uranium enrichment at an underground nuclear facility.
Brenda Shaffer, professor, U.S. Naval Post Graduate School
All on the demand side, the trends look really good
The OPEC impasse was reportedly caused by Saudi Arabia arguing against pumping more due to new coronavirus lockdowns, while Russia led calls for higher production, citing recovering demand; most of the participating members are against a February output rise.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, said of Tuesday's highly-anticipated meeting, "Anything can happen, but Russia may not want to lose face and capitulate so easily.
"It looks like we may be in for some lengthy negotiations."
Meanwhile, now that the Covid vaccines are ramping up throughout the world, experts weighed in on how the oil market would fare in 2021, and as usual opinion was divided: OPEC secretary general Mohammad Barkindo said there would still be "many downside risks to juggle" in the first half of the year, but he predicted the global economy could strongly rebound in the second half - with the caveat that travel, tourism, leisure, and hospitality could take years to reach pre-virus levels.
Kuwait's oil minister was similarly inclined, stating on Monday that he expected a gradual recovery in oil demand, particularly in the second half of 2021.
Brenda Shaffer, professor at the U.S. Naval Post Graduate School, told Bloomberg that with OPEC now meeting monthly, "That can really help to fine tune the oil market so it's not so quick to make big decisions."
She added that the demand for diesel has recovered to pre-lockdown rates and commodities in general "are soaring," plus "there's a lot more money out there: paper traffic is back up to pre-Covid levels," and while jet travel isn't fully recovered by any means it has still climbed to demand levels not seen since the first lockdowns.
"All on the demand side, the trends look really good," she said.