Oil Prices for Jan. 29, 2021: Brent Crude, WTI - Bloomberg

Photographer: Luke Sharrett/Bloomberg

Oil erased most of its gains alongside a broader market decline, while investors assess factors surrounding the recovery in consumption.

Futures in New York traded little changed after earlier climbing as much as 1.7% on Friday. U.S. equities weakened amid lingering concerns over volatile retail trading. While Johnson & Johnson’s Covid-19 vaccine breakthrough allayed some worries about the deterioration of consumption, it is clear the demand environment remains tepid. Chevron Corp. posted a fourth-quarter loss after weak fuel consumption hit its refining business.

There’s growing “risk that demand will remain sub-par for longer than we had expected, or certainly hoped for,” said Bart Melek, head of global commodity strategy at TD Securities.

Crude’s rally has cooled in recent weeks amid reinstated lockdowns and spreading coronavirus variants. However, the oil futures curve remains strong, an indication of shrinking supplies. The nearest timespreads for global benchmark Brent and U.S. crude futures are in backwardation -- a market structure where nearby contracts are more expensive than later-dated ones.

Prices
West Texas Intermediate crude for March delivery gained 7 cents to $52.41 a barrel at 11:42 a.m. in New York Brent for April settlement rose 12 cents to $55.22a barrel The March contract, which expires Friday, increased 43 cents to $55.96 a barrel

Yet, a consumption recovery still remains shaky. The virus variant identified in South Africa has reached the U.S. just as Europe is set to tighten its rules on the export of vaccines.

India’s demand for diesel, the country’s most-used fuel, is also struggling to shake off the pandemic’s crippling effects on its economy. The crawl back to pre-virus levels will be slow, with annual diesel consumption growth rates seen fully recovering in the year ended March 2022, a senior oil executive said.

Other oil-market news:

A Dutch court has ordered Royal Dutch Shell Plc’s Nigerian unit to compensate for oil spills in two villages over 13 years ago. Guards protecting Libya’s oil installations gave the country’s government a new deadline to pay overdue salaries at two of the nation’s main crude-export terminals, maintaining a lingering threat to the conflict-ridden country’s shipments just months after they revived. An obscure company that employs five people and appears to produce negligible amounts of oil and natural gas from some wells in Appalachia slumped Friday, one day after soaring almost 1,000% in the latest Reddit-fueled day-trading craze.

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