Crude markets are trading in a tight range around the Brent $45 mark with little progressive news flow on the macro front.

This week’s inventory data was supportive, but the next significant catalyst that the market is focused on could be the US coronavirus stimulus package, which should positively impact the broader economic recovery and, by extension, energy demand.

Clouding the view overnight, the International Energy Agency (IEA) market outlook sounded a cautionary note around jet fuel demand while revising their overall demand outlook down and supply revised up.

Indeed, the staggering and rapid rise in Covid-19 case counts around the world has shifted the dial slightly. Case count totals have breached the 20 million level and have traders looking over their shoulders to where new lockdowns might be necessary for the wake of coronavirus curb measures getting reintroduced in hot spots around the globe.

And like traders, this has not gone unnoticed by critical forecasting agencies. It’s worth highlighting that it took six months for cases to reach 10 million after the first infection surfaced in China while the second 10 million took only six weeks.

While the worst-case scenarios from 2Q have been ruled out, still, the skies are not entirely blue. The lack of contrails reminds us that a significant product demand is absent as airline fleets around the world remain grounded as jet fuel demand remains exceptionally depressed.

The IEA is reducing demand estimates for 2020 and 2021 and increased forecasts for non-OPEC supply in 2H20 to account for the return of shut-in production from the US and Canada, with OPEC applying similar logic.

The IEA points out that demand has been running ahead of supply since June this year, thanks in part to OPEC+ cuts and curtailments from non-OPEC producers, and though markets will remain tight in 2H, they will be less tight than initially expected.

No surprises from OPEC as it was reported that Russia’s oil minister – Alexander Novak – sees no hasty OPEC+ decision this month.

Consistent with the market’s view, the Joint Ministerial Monitoring Committee (JMMC) will only add more barrels when prices remain stable nearer to the midpoint of their $45-50 near term targets, and the curve moves in more ordinary and consistent backwardation.

But Novak’s comments suggest a couple of more dollars can be squeezed to the upside before OPEC+ turns on the taps. While the improving vaccine outlook is helping the overall view.

Oil markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp