Week Ahead: OPEC meets to discuss production cut extensions & US nonfarm payrolls released

 OPEC and allies gather this week to discuss how best to proceed in what has been a very challenging year for oil. How will this affect energy markets moving forward? US Nonfarm Payroll data for November is also revealed, showcasing how many, if any, new jobs have entered the US economy last month. 

OPEC meetings 

The fate of the 2021 oil markets is in OPEC’s hands as the 180th OPEC Conference takes place on Monday 30th November.  

The 12th OPEC and non-OPEC Ministerial Meeting follows on Tuesday, December 1st 

Production cut extensions are likely to dominate the agenda for this latest round of talks. OPEC has already lowered production by record levels in 2020 and was hoping to ease levels back up in January 2021. 

This now seems unlikely. Instead, Reuters reports that the group and its allies will probably vote to extend its production cuts well into the new year. 

“The OPEC+ ministers will probably agree to extend current production for the first quarter of 2021,” an OPEC delegate told Reuters regarding policy for next year. 

 “There are still some challenges on demand, but I hope the vaccine will change the picture soon,” he said. 

January’s goal was to ease production output upward by 2 million barrels per day, which corresponds to roughly 2% of global oil consumption. OPEC members are currently cutting 7.7m bpd. The planned January cuts would have taken daily output volumes up to 5.7m bpd. 

While the news of various vaccines having very high levels of effectiveness has given a glimmer of hope to oil producers, it is unlikely that oil demand will really pick up until the second half of 2021. This due to mass vaccination taking a while to fully implement, despite the fact vaccines may gain emergency approval and quick roll out in the coming months. 

For now, demand remains suppressed thanks to the pandemic’s second wave.  

Another factor OPEC will have to contend with is conformity. While a pre-conference meeting on 17th November confirmed full member conformity with OPEC cuts, not all member states are receptive. 

Libya, for instance, has said it will not commit to further cuts until its own production volumes reach 1.7m bpd. Currently, Libyan output measures 1.25m bpd, after the reopening of one of its largest oilfields. Iraq, too, is already non-compliant and is forecast to stay that way. 

That may become a major sticking point in next week’s negotiations.  

What will this mean for oil prices? It’s difficult to say at this point. Vaccine news has already put a bid on pricesCrude prices rose to their highest since March last week, breaking free from a multi-month range with Brent north of $48 and WTI rallying to $46. 

US Nonfarm Payrolls 

Friday, December 4th will see the release of November’s US Nonfarm Payrolls (NFP) data. This is an indicator of how many jobs have entered or exited the US economy that month. 

Has November continued the upward swing seen across the previous two months? 

NFP rose 638,000 in October, while in September the number of new jobs rose by 672,000, revised from 661,000, exceeding the market expectation of 600,000. 

Despite this, the pandemic does not seem to be under control in the US. More than a million new cases, and 85,000 new hospital admissions, were reported across the country last week. 

But the US is keen to keep businesses and the economy open. President-Elect Joe Biden has been trying to avoid the phrase “lockdown” – a possible indicator of his administration’s intention to keep regulations light once he takes office in January 2021. 

Dr Vivek Murthy, a former U.S. surgeon general who is a top health advisor to President-elect Joe Biden, has described a full national lockdown as a “last resort”, showing further US attitudes to righter restrictions. 

Can the US take the pandemic heat? 

Major Economic Data 

Date  Time (GMT)  Currency  Event 
Sun Nov 29  11.50pm  JPY  Retail Sales Y/Y 
       
Mon Nov 30  1.00am  CNH  Manufacturing PMI 
       
  8.00am  CHF  KOF Economic Barometer 
       
  All day  All  OPEC Meetings 
       
  All Day   EUR  Eurogroup Meetings 
       
  2.45pm  USD  Chicago PMI 
       
  3.00pm  USD  Pending Home Sales m/m 
       
Tues Dec 01  3.30am  AUD  Cash Rate 
       
  3.30am  AUD  RBA Rate Statement 
       
  09.30am  GBP  Final Manufacturing PMI 
       
  All Day  All  Opec-JMMC Meetings 
       
  1.30pm  CAD  GDP m/m 
       
  2.30pm  CAD  Manufacturing PMI 
       
  3.00pm  USD  ISM Manufacturing PMI 
       
Wed Dec 02  12.30am  AUD  GDP q/q 
       
  1.15pm  USD  ADP Nonfarm Employment Change 
       
Thu Dec 03  1.30pm  USD  Unemployment Change 
       
  3.00pm  USD  ISM Services PMI 
       
Fri Dec 04  1.30pm  CAD  Employment Change 
       
  1.30pm  CAD  Unemployment Rate 
       
  1.30pm  USD  Average Hourly Earnings m/m 
       
  1.30pm  USD  Nonfarm Employment Change 
       
  1.30pm  USD  Unemployment Rate 

 

Key earnings data 

Date  Company  Event 
Mon Nov 30  Zoom Video Communication  Q3 2021 Earnings 
     
Tues Dec 01  Salesforce  Q3 2021 Earnings 
  Scotiabank (Bank of Nova Scotia)  Q3 2021 Earnings 
  Bank of Montreal  Q4 2021 Earnings 
  China Gas Holdings LtdShs  Q2 2021 Earnings 
  Hewlett Packard Enterprise Co.  Q4 2020 Earnings 
     
Weds Dec 02  Royal Bank of Canada  Q4 2020 Earnings 
  Snowflake Ink  Q3 2021 Earnings 
  CrowdStrike  Q3 2021 Earnings 
  Synopsys Inc  Q3 2021 Earnings 
  Splunk Inc  Q3 2021 Earnings 
  Okta Inc  Q3 2021 Earnings 
  Elastic B.V.   Q2 2021 Earnings 
  National Bank of Canada  Q4 2020 Earnings 
  Zscaler Inc  Q1 2021 Earnings 
     
Thu Dec 03  Toronto-Dominion Bank  Q4 2020 Earnings 
  Dollar General Corporation  Q3 2020 Earnings 
  DocuSign Inc  Q3 2021 Earnings 
  Canadian Imperial Bank of Commerce (CIBC)  Q4 2020 Earnings 
  Marvell Technology Group Ltd  Q3 2021 Earnings 
  Kroger  Q3 2020 Earnings 
  Copper Cos. Inc  Q4 2020 Earnings 
  Ulta Beauty Inc  Q3 2020 Earnings