Oil records its first weekly loss in three weeks


Oil records its first weekly loss in three weeks

Oil records its first weekly loss: Global oil prices receded this week, as investors were concerned about the rapid rise in numbers of Coronavirus Covid-19
infections in China, which warns of a further slowdown in oil demand due to the epidemic.


In this report, Evest shows you how oil has performed during this week amid many challenges
that this market faces, especially in a difficult epidemic situation.


Oil in a week

On Friday, prices of West Texas Intermediate crude futures for February delivery fell by $ 1.21 a barrel,
equivalent to 2.3%, to $ 52.36 a barrel. Brent crude for March delivery fell by $ 1.32 a barrel, or 2.3%, to reach $ 55.1 a barrel.


Both benchmarks recorded their first weekly loss during 3 weeks as Brent fell off 1.6%, while WTI is down to0. 0.2%.


On an annualized basis, Brent crude is down 15.13%, while WTI is down to 11.04%.


Last week, the two standard prices of crude oil recorded their highest levels in nearly a year,
as WTI touched the highest at $ 53.57 a barrel on Thursday, while Brent crude reached 56.58 a barrel on Tuesday.

Correction of oil prices began when a number of cities in China returned to lockdown due to the high cases of Coronavirus infections.


Not to mention that a number of countries in Europe have extended tightening measures to prevent the spread of Coronavirus.

This causes oil producers to be forced to balance supply and demand.


The rise of prices in the first half of the week was driven by data from the American Petroleum Institute and Energy Information Administration of the US Department of Energy which showed that US crude oil reserves respectively,
fell by 5.8 million barrels and 3.2 million barrels. At the same time,
industry experts expected a decrease in reserves by about 2.3 million barrels.

Industry data also showed an increase in stocks of Gasoline and Distillates.

. So, against the backdrop of a significant decline in US diesel exports- to 714.000 barrels a day from 1.232.000 barrels a day
– US diesel reserves reached 163 million barrels during last week. This is the maximum since October 9, 2020.


The epidemiological situation is getting worse

On Friday, China reported its highest daily rate of Coronavirus Covid-19 infections in more than 10 months. China announced that they now have over 1.000 cases of Covid-19, as the number of new Infections has risen sharply in the north part of the country.

The cities of Shijiazhuang, Shengtai, and Langfang were closed,
which by its turn led to imposing restrictions on the movement of more than 20 million people.


Globally, the number of Covid-19 infections had exceeded 93 million.
Mid-January including more than 1.99 million deaths, according to data from John Hopkins University.


The United States continues to remain on top of the countries most affected by this epidemic as there are about 23.3 million infections and nearly 389.000 deaths in America.


Oil expectations during the coming period

China’s demand for oil could fall sharply in the coming years,
as the country significantly increased its oil reserves in 2020 in the context of record – low oil prices.

In addition to that, some forecasts suggest that US travel activities may take up to the third quarter of the year to return to their normal case.


However, US demand for oil may increase later on during this spring when numbers of Covid-19 infections begin to decline gradually.


US demand for oil will also be supported by the $ 1.9 trillion stimulus package announced by President-elect Joe Biden.

The nearly $ 2 trillion aid package for Covid-19 in the US which was launched by President-elect Joe Biden
could increase demand for oil from the World’s largest consumers of crude oil.


Earlier, Oil prices rose with financial support driven by strong stocks and a weak dollar,
making oil cheaper, along with strong Chinese demand.


Some of these positive sentiments were eventually stymied by the dollar rise and tightening of China’s shutdown measures.


A $ 50 a barrel is an important psychological limit for West Texas Intermediate crude oil is difficult to break
unless the market is given bad news with a big impact.


Saudi Arabia committed to controlling oil production and the prospect of vaccines can control the increase of infections,
Median West Texas oil price could remain above $ 50 a barrel in the long run.


On the other side, on Thursday customs data showed that crude oil imports to China rose by 7.3% in 2020,
as while its imports reached in 2 of 4 seasons as refineries also increased but prices decreased.

This led to an increase in Chinese oil stocks.


US oil rigs rise

Data of oil field services firm Baker Hughes on January 15 showed that last week;
the number of oil platforms operating in the US rose for the sixth week in a row, indicating an increase in production through the near future.

The number of oil excavators which are indicators of the outlook for the US oil industry and short-term crude oil production rose by 12 this week.


According to weekly data released by Oil Field Services firm Baker Hughes,
a number of oil rigs in the United States of America rose from 12 to reach 287 during the period from 9 to 15 January, compared to last week.