Oil: Prices remained in a narrow range for the third week, around $52 in New York and $55 in London. As has become routine, much of the news impacting oil prices has to do with the coronavirus and vaccine programs’ pace. For the immediate future, lockdowns in many regions will limit demand. The more contagious coronavirus variant identified in South Africa has reached the US, raising worries that more outbreaks may be ahead.
The course of the coronavirus continued to roil the oil markets last week. After a 10 percent gain since the beginning of the year, oil reversed last week as new outbreaks of the virus accompanied by recent lockdowns appeared worldwide. Reports that China has been forced into new lockdowns and that a new and possibly more lethal variant of the virus is spreading across Europe added to concerns. Delays in the delivery of vaccines are also causing worries that the impact of the virus will continue a while longer.
Prices, which hit their highest in nearly a year the previous week, posted their first weekly decline of 2021 last week. Brent was down 1.6 percent on the week, and US crude down about 0.4 percent. Producers face unprecedented challenges balancing supply and demand with other factors involving vaccine rollouts versus lockdowns, strong equities, a weaker dollar, and robust Chinese demand.
Oil posted the biggest weekly gain since late September as Saudi Arabia’s plan to slice output spurred a surge in physical crude buying. In New York, futures advanced $3.72 this week, and Brent oil topped $55 a barrel for the first time since February. Last week’s pledge from Saudi Arab to cut production by 1 million b/d in February and March has made for a tighter supply outlook sooner than anticipated. Meanwhile, prospects for additional stimulus under a Biden administration spurred broader market gains.
Crude futures rode a late session upswing to end 2020 higher, as the market looked to a Jan. 4th OPEC+ meeting for direction. WTI settled at $48.52, and Brent settled at $51.80. With oil markets closed on Jan. 1st for the New Year’s Day holiday, the next driver will likely be the OPEC+ group meeting when ministers will decide on production quotas for February. Russian Deputy Prime Minister Novak floated the possibility of another 500,000 b/d increase for February, the maximum monthly amount allowed under the rules. Global crude oil markets lost about a fifth of their value in 2020 as coronavirus lockdowns paralyzed much of the worldwide economy.
Weekly prices declined for the first time since October, as a new coronavirus mutation spread through parts of the world and poses risks to energy demand. Futures in New York slid 1.8 percent this week yet closed up on Thursday, with equities gaining after the UK clinched an historic trade deal with the European Union. Stricter restrictions were extended to much of England to contain the new strain of Covid-19, and China said it would pause flights to and from the UK. A cluster of infections in Sydney is growing and, in the US, New York City hospitalizations are at the highest since May.
Prices rose for a seventh straight week as efforts to pass another US virus relief package added to optimism that the vaccine’s rollout will provide a boost in demand. Futures rose 1.5 percent in New York on Friday, extending this week’s rally to over 5 percent. Talks on a relief package have made some headway, and recent progress in rolling out a Covid-19 vaccine has also buoyed the outlook for consumption. Brent crude settled at $52.26 a barrel after touching $52.48, its highest since March. West Texas Intermediate settled at $49.10 after reaching $49.28, its highest since February.
Oil managed a small weekly gain last week as the impasse in Washington over pandemic relief dimmed chances of an imminent boost in demand. New York futures eased off a nine-month high alongside a broader market decline as bipartisan talks on another round of US fiscal stimulus stalled. West Texas Intermediate rose less than 1 percent for the week closing at $46.57. At week’s end, Bent closed at $49.97 after rallying above $50 earlier in the week for the first time since March. The futures market is primarily focused on the arrival of a vaccine for the coronavirus, which hopefully will open the way for demand to return to normal. Many, however, believe that “normal” demand still is months away and that there is much pain in the immediate future.
Prices rose for a fifth straight week with support from the OPEC+ deal and hopes for another round of US stimulus. Futures in New York and London closed at nine-month highs on Friday, with signs momentum is building toward a fiscal stimulus plan that could provide a demand boost before a vaccine is widely available.
Prices rose for a fourth straight week, buoyed by optimism over Covid-19 vaccine progress ahead of an OPEC+ ministerial meeting this week. Futures in New York advanced 8 percent last week, despite edging lower on Friday. The shape of the oil futures curve firmed over recent sessions, with some nearer-dated futures contracts rising above later-dated ones. It’s a sign of how the market has dramatically repriced the increased likelihood of a vaccine rollout jumpstarting more robust demand next year.
