Oil struggles to regain positive momentum
After a horrible week, the black gold struggles to stabilize.
Oil prices are struggling to regain their strong upward trajectory of the past four months as new Covid-19 lockdowns in Europe weigh on crude oil prices as they seek to rebound from the worst week since late October. The New York-traded West Texas Intermediate, the benchmark for US crude oil, swung between red and green all day before settling at $ 61.55 a barrel, up just 15 cents, or 0.2%. WTI thus gained 2.4% compared to Friday, but was hardly able to move the market, which was desperately looking for a mood-enhancer after the 6.4% slump last week. London-traded Brent, the global benchmark for crude oil, rose just 9 cents, or 0.1%, to $ 64.53. Like WTI, Brent rose 2% on Friday, but ended the week down 6.8%. Last week's decline was the first noticeable decline for crude oil markets after a nearly five-month rally with few stops that pushed prices up nearly 90%. Crude oil prices were barely able to break new ground on Monday after a meeting chaired by German Chancellor Angela Merkel decided to tighten Covid-19 restrictions, backing out of a recent easing as the infection rate is highest in Europe Economy had risen to over 100 per 100,000 inhabitants. According to a government draft that was discussed at the meeting, the lockdowns are to be extended until April 18, with the intensity varying depending on the region and impact. In neighboring Poland, too, the number of Covid-19 infections is more than three times as high as in Germany, while Italy - Europe's No. 1 hotspot for the virus during last year's outbreak - is on a nationwide lockdown during the Easter weekend from 3rd to 3rd April 5th prepared. Fawad Razaqzada, an analyst at ThinkMarkets in London, said the price of oil has rebounded from an unprecedented low base - particularly from where WTI was minus $ 40 a barrel last year - and from historically highs OPEC cuts backed by optimism now about reopening the economy on Covid-19 vaccinations and the promise of greater travel activity that could fuel demand for pre-pandemic fuel. Still, crude oil prices could continue to struggle as supply in the US could grow faster than demand, he said. "All in all, I can't see oil prices rising significantly any further. I think Brent will have a hard time staying above $ 70 and I expect WTI to average $ 60 a barrel in 2021," he said . "The downward momentum may have started after last week's sell-off. While I think demand will continue to improve as more economies relax travel restrictions in the coming months, the effects of that development will to some extent offset by rising oil supply. OPEC + will slowly ease supply restrictions, while US shale oil production is likely to be ramped up again due to attractive oil prices. " Prior to last week's slump, crude oil prices rose practically in only one direction - up - on the back of OPEC + production cuts and the promise that the economy will recover after the Covid-19 closings. From just under $ 36 a barrel on October 30, WTI rose to just under $ 68 by March 8. Brent rose from under $ 38 to just over $ 71 in the same period. During this period, however, the weak demand for aviation and other transportation fuels was virtually overlooked as global travel remained severely restricted by the pandemic. Europe's constant battle with new outbreaks of infection, the alarmingly slow pace of vaccinations, and new blockade closures have also been treated with little seriousness. On Thursday, however, those worries escalated, exacerbated by the 13-month highs in bond yields, based on the 10-year US Treasury note, and the dollar index surge to nearly 92. WTI slumped to $ 58.20 while Brent fell to $ 61.45, both to five-week lows. Friday's data also showed that US drills began to benefit from an earlier price hike amid optimism about returning demand, adding most rigs to oil production since January in the week to Friday.