Photographer: Luke Sharett / Bloomberg
Photographer: Luke Sharett / Bloomberg
Brent oil lost some of the gains posted at the end of its worst week since October as the dollar strengthened and investors judged the short-term outlook for demand.
London futures lost 1% to drop below $ 64 a barrel as a rising dollar reduced the appeal of US currency-priced commodities. The demand shows some signs of weakness with the number unsold oil cargoes loaded from West Africa in April are swelling as Germany proposes an extension lockdown restrictions. Despite a 2% gain on Friday, crude oil suffered a heavy weekly loss after last week’s bearish start.
Also see: Oil is still on a bumpy path to recovery despite price swings
Saudi Arabia, meanwhile, saw another attack on its energy supplies. While the offensive by Iranian-backed Houthi rebels took a The Aramco refinery had no impact on the oil supply on Friday, it is the latest in one series of attacks on the kingdom.
Despite the weekly plunge, there is confidence in the long-term outlook and a return to higher prices. Goldman Sachs Group Inc. said the recent sell-off was transient and the The rebalancing would be continued with vaccinations that encourage greater mobility. The market will keep a close eye on next week’s OPEC + meeting for any output policy change in May, especially following the drop in oil and comments from the International Energy Agency that supply is plentiful.
“Oil could continue to swing between red and green, torn between the fear of demand and the die-hard optimists,” said Vandana Hari, founder of Vanda Insights in Singapore. Prices “are likely to hover around current levels, at least until OPEC + ‘s next move,” she added.
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The rapid time spread for Brent is still in a bullish backwardation – where prices nearly dated are more expensive than later dated – although the gap narrowed over the course of last week. The spread was 16 cents a barrel on Monday, from 67 cents at the start of the month.
Iran’s supreme leader Ayatollah Ali Khamenei, meanwhile, said his country was in no hurry to nuclear deal, though he reiterated that Tehran was still willing to return to the original terms of the deal once the US lifted sanctions. Despite the punishments, Iranian Crude oil exports appear to be on the rise, with China recently ramping up its purchases.
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– With the assistance of Rob Verdonck