The Daily Dose; The retreat from $50/bbl continues.

-EIA sees $50 perhaps by Q4 2020.

-In Iraq, to the victor goes the spoils.

Crude oil prices spent much of Tuesday searching for direction, as optimism over a vaccine launch in the United Kingdom offset new quarantine measures in the United States. In its much-anticipated short-term outlook, meanwhile, the EIA found demand would likely remain suppressed, but some of the pressure could be eased by lower shale production. In the geopolitical arena, meanwhile, we’re seeing a coup of sorts with China making big commitments in Iraqi oil.

Crude oil prices recovered from morning lows, but were lingering around flatness near the end of the day. The price for Brent crude oil was up 0.16% as of 2:48 p.m. to trade at $48.87 per barrel.

Perhaps talk of $50 Brent was a bit premature. The EIA said it expected Brent will average $47 per barrel in the first quarter and hit $50 per barrel on average by fourth quarter 2021. Both forecasts are higher than the EIA’s estimate from last month, though the EIA said it expected that “global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices through much of 2021.” Total US crude oil production, meanwhile, is expected to decline modestly next year to 11.1 million bpd.

Brent crude oil averaged $64.34 last year.

On the pandemic, the British government started vaccinating the elderly against COVID-19 in a test for the West on what could be developing over the next few weeks and months. But until vaccinations are widely distributed, social restrictions will be in place to limit the spread. That could impact holiday travel in December, leaving a glut of products such as motor gasoline and diesel on the market. Michigan on Monday extended restrictions on indoor dining and other limits for another 12 days, while California tightened its lockdowns through Christmas. Meanwhile, US households are struggling under the weight of pandemic and stimulus talks seem to be stalled. Some of the early stimulus measures enacted in the United States are expiring, particularly measures meant to shield people from evictions. A measure of small-business confidence, meanwhile, fell to its lowest in seven months. Neither offers optimism for the short-term future.

Elsewhere, we’re reminded that nature abhors a vacuum when hearing that China is helping finance the Iraqi government in a lucrative oil deal. Iraq’s State Organization for Marketing of Oil is expected to sign an agreement with China’s ZhenHua Oil Co., according to Bloomberg news. That deal outlines shipments of about 13,000 barrels per day on an annual basis in exchange for an estimated $2 billion in up-front payments. That comes as US President Donald Trump made good on his pledge to bring some troops home from Iraq. US foreign policy in the Middle East is inextricably tied to oil; if the Americans don’t use it, someone else will. We’ve noted before that the Cold War is alive and well and running through a pipeline somewhere overseas. With the latest move by China, we wonder to what victor went the spoils.

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