Oil prices started to crash on Thursday afternoon and fell nearly 9%.
WTI was down 8.68% to $ 58.99 a barrel from 4:04 pm ET, while Brent was down 8.01% to $ 62.55 a barrel. It is the largest drop in absolute terms since April 2020, when oil moved into negative territory.
Analysts have made predictions during the recent price hike, with bulls indicating there is more room to run, announcing that a super cycle is coming. Others, more cautious in their outlook, have been warning for a few weeks that the optimism in the oil markets was not justified.
The recent rally was largely due to OPEC + production cuts – or rather, their agreement to keep production stable in April, rather than ramping up production as the market had expected. The death of the 3rd round of stimulus in the United States had also boosted sentiment in the oil market.
But a surging dollar, increased US crude stocks, growing fears of a resurgence in coronavirus cases and concerns about vaccine safety in Europe have proved worthy opponents.
Those concerns are directly related to the resurgence in oil demand. And the markets today view this demand picture as less favorable, as evidenced by the crude oil futures showing that the market deficit is narrowing.
WTI’s front-month contract is re-traded at a discount on the following month.
Crude Oil WTI April contract is now trading at $ 59.46 a barrel, while the May contract is trading at $ 59.57. WTI’s contract in April is now down $ 5.14 on the day.
This is the fifth day in a row for oil price declines and the largest drop in absolute terms since April 2020
By Julianne Geiger for Oilprice.com
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