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Oil Dips Near $40 With IEA Warning of Fragile Market Outlook

Oil Dips Near $40 With IEA Warning of Fragile Market Outlook

(Bloomberg) — Oil slipped near $40 a barrel in New York as the IEA cautioned on a fragile outlook and Russia indicated OPEC+ may stick with its current plans to lift output.

The group’s plans to boost production in January will leave the market in a precarious balance, and potentially unable to handle higher supply from elsewhere or a drop in demand, the International Energy Agency said. Russia’s energy minister said his nation expects to be able to gradually raise production without harming the market.

Though prices edged lower, there were bright spots. A Chinese mega-refiner is snapping up barrels of Middle Eastern crude to feed trial runs of its expanded plant. At the same time India’s refiners have cranked up processing to meet higher demand during a festive period.

graphical user interface: WTI close to 50-, 100- and 200-day moving averages

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WTI close to 50-, 100- and 200-day moving averages

A lot of traders’ attention is turning to plans by OPEC+ to raise supply next year in line with its agreement earlier this year. While some producers inside the group are said to be having doubts, the United Arab Emirates and now Russia have said that, for the time being, the group will proceed as scheduled. Saudi Arabian Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin on Tuesday urged the alliance to comply with agreed cuts as virus infections rise again.


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“OPEC+ could provide a silver bullet by not tapering cuts at the start of next year as planned,” said PVM Oil Associates analyst Stephen Brennock. “But such a proposition will be hard to swallow by some of the group’s members.”

West Texas Intermediate for November delivery fell 0.4% to $40.05 a barrel at 12:10 p.m. London timeBrent for December settlement lost 0.2%, to $42.38

Despite its cautionary outlook, the IEA said that the

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Global economic recovery from Covid pandemic is fragile and patchy

Global economic recovery from Covid pandemic is fragile and patchy

The global economy has achieved only a fragile recovery from the depths of the coronavirus pandemic and many emerging economies are still suffering severe hardship, according to the latest Brookings-FT tracking index.

Growth in the world’s largest economies has been uneven according to the index, which highlights the precarious outlook that will form the backdrop for the annual meetings of the IMF and World Bank this week.

With a second wave of coronavirus undermining efforts to return to normal, businesses’, households’ and investors’ confidence shaken and little scope for additional monetary policy stimulus, most countries have a long way to go before output reaches pre-pandemic levels.

“A broad-based and robust recovery does not appear on the horizon,” said Professor Eswar Prasad of the Brookings Institution, adding that the “risks of substantial and long-lasting scarring effects on economies are rising”.

The meetings will be held virtually from Washington this week. Kristalina Georgieva, managing director of the IMF, said last week the recovery from the Covid-19 crisis would be, “long, uneven and uncertain. And prone to setbacks.”

Economic data from across the world are weaker than the worst point in any previous downturn since the Brookings-FT Tracking Index for the Global Economic Recovery (Tiger) started in 2012.

Line chart of Composite index of relative strength of a range of indicators showing The global economy remains in dire straits

The index compares indicators of real activity, financial markets and confidence with their historical averages for the global economy and for individual countries, capturing the extent to which data in the current period is normal.

It showed the recovery in advanced economies is far from complete after a historic drop in the spring, and the situation in emerging markets is much worse with indicators still far removed from normal levels.

Even though manufacturing has recovered strongly, boosting world

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