Crude oil prices this week could move lower on waning demand from renewed coronavirus restrictions in the United States and Europe, though Asian buying could still provide some support, analysts said.
Broader markets rallied last week, overlooking the unrest in the U.S. Capitol to focus on the prospects of further stimulus and COVID-19 vaccine developments under President-elect Joe Biden. For crude oil, that sentiment was enhanced by a Saudi decision early last week to unilaterally trim 1 million barrels per day from production.
Giovanni Staunovo, a commodities analyst at Swiss investment bank UBS in Zurich, said this week’s monthly market reports from OPEC and the International Energy Agency are likely to reflect waning demand, which would justify the Saudi cuts. That in turn could eat into bloated inventories as Asian buyers look to the North Sea or the United States to replace Saudi barrels.
“The Kingdom’s preemptive move suggests to me a desire to defend prices and support the oil market amid demand concerns due to extended mobility restrictions in Europe,” he said. “But if demand falls to a lesser extent, the Saudi move would also help to accelerate the process of reducing oil inventories. I still expect oil demand to rebound sharply in (the second quarter) driven by vaccine uptake and increased travel."
Both the IEA and OPEC last month lowered their demand estimates for 2021 citing early-year pressures from the pandemic, which has again exploded. A more infectious strain of the coronavirus also is spreading.
RELATED: Oil closes above $50 a barrel, marking another milestone in the pandemic
Bob McNally, president of the Rapidan Energy Group, said the market looked to have something of a herd mentality given the near-50 percent rally in international benchmark Brent crude oil since Nov. 1., when early vaccine developments were announced. A downward trend could emerge, however, given the prospects of more barrels on the market from the likes of Iran as well as demand destruction from the various lockdowns in place to control the spread of COVID-19.
“The surprise Saudi cut raised the floor but this price rally is looking overdone from a fundamental perspective,” he said.
Ole Hanson, the head of commodities strategy at Saxo Bank in Denmark, said the price for Brent could eventually move to $60 per barrel later in the year, but the rally could be tempered in the near term.
“Having rallied by 40 percent since the first vaccine announcement in early November, the market has now reached a price level that potential doesn’t reflect current fundamentals,” he said. “With this in mind OPEC+ will have to rely on Saudi Arabia to maintain its unilateral cut, potentially longer than the two months, in order to avoid other OPEC+ members, including Russia, being forced to cut production again.”
RELATED: Rig count rises as oil crosses $50 threshold
The price for Brent crude oil, the global benchmark, ended up 8 percent last week to finish trading Friday at $55.99 per barrel. West Texas Intermediate, the U.S. benchmark, rallied some 7.7 percent last week to end trading at $52.24, the highest since late February.
Oil was down in early morning trading Monday, falling below $52 a barrel.
"oil" - Google News
January 11, 2021 at 07:30PM
https://ift.tt/3sfYKeA
Oil rally losing momentum - Houston Chronicle
"oil" - Google News
https://ift.tt/2PqPpxF
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Oil rally losing momentum - Houston Chronicle"
Post a Comment