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Oil fell from a nine-month high on concerns that more pandemic lockdowns could slow a global rebound in fuel demand, even after data showed China’s economic recovery accelerated last month.
Futures lost 0.7% and Asian stocks fell on Tuesday. New York is heading for a second full lockdown after a surge in infections, and London is under England’s strictest coronavirus rules as of Wednesday. The tightest restrictions come when the US begins administering its first doses of vaccine.
In China, which has controlled the spread of Covid-19, industrial production increased 7% in November from the previous year and retail sales expanded. The nation also processed a record amount of crude on a daily basis last month as fuel consumption recovered, providing a rare bright spot for imports.
Optimism that fuel consumption will pick up after the vaccines are launched has helped oil rise 30% more since late October. However, the short-term outlook looks difficult as OPEC cuts its projections for oil demand in the first quarter of 2021 as the group and its allies prepare to start returning some crude to the market starting in January.
“Crude may experience occasional pullbacks, but I don’t see a major downward correction,” said Vandana Hari, founder of Singapore-based energy consultancy Vanda Insights. “I hope that the continued launch of vaccines around the world will continue to be an important supporting factor for the weeks and months to come.”
In Asia, Japan suspended its domestic travel system for two weeks after infections spiked, while new cases rose in South Korea.
Prices
- West Texas Intermediate for January delivery lost 34 cents to $ 46.65 a barrel on the New York Mercantile Exchange at 8:05 am London time, after rising 0.9% on Monday.
- Futures closed at their highest level since March 3.
- Brent for February settlement fell 0.8% to $ 49.90 on the ICE Futures Europe exchange after gaining 0.6% on Monday.
The forward curve for oil weakened slightly this week. Brent’s immediate time frame was 1 cent a barrel in backwardation, where close-dated contracts are more expensive than later-dated contracts, compared to 13 cents on Thursday.
OPEC and its allies will meet on January 4 to consider whether they can go ahead with monthly increases in supply, although a report from the group on Monday suggested that it can gradually restore production over the next four months without the market having a return. a surplus. Producers also face increased risk in the Middle East, following another tanker explosion near a port in Saudi Arabia, which was described as a terrorist attack.
