A bad week for oil with 6% weekly loss
A bad week for oil with a 6% weekly loss
A bad week for oil with a 6% weekly loss: Crude oil prices finished the weekend’s session trading at a rise but dropped by nearly 6% a week.
Brent crude oil recorded $ 64.53 a barrel, which is the lowest price in almost 2 weeks. At the same time,
West Texas Intermediate crude was traded at $ 61.42 a barrel.
From Sunday to Thursday, oil was continually retreating but recovered again last Friday.
The rising in crude oil prices was a result of an attack by Houthi rebels in Yemen against a Saudi oil refinery.
Aramco announced that the attack caused a fire, but it was completely controlled.
At the same time, Saudi Arabia announced that the unmanned attack on Saudi Arabia’s oil refinery in Riyadh had no impact on oil supplies.
Saudi Arabia confirmed that Iran-backed Houthi rebels were behind this attack.
Oil is retreating again
Health experts around the world say that there is a third wave of Coronavirus Covid-19 which by its turn will affect sentiment at the moment,
regarding recovery for oil demand.
Many countries are still closing their airports and stopping traffic, which affects oil,
but oil seems to have reached a corrective stage after the significant rise that took place,
since the end of last year, at the same time as starting a large-scale vaccination campaign.
Oil is expected to continue this decline during next week unless there is any new update regarding United States inventories
which have been weekly increasing for almost a month.
This may cause harm towards sentiments.
According to experts
oil swings within $ 60 to $ 70 a barrel, but it needs more support to reach higher levels.
Bleak expectations for oil demand are newly back to the horizon
On Thursday, oil retreated to its largest daily decrease since last summer, amid growing fears regarding an increase in numbers of Coronavirus infections
in Europe in addition to supporting the US dollar.
Fears of new restrictions imposed by many European countries to contain continuous infections of the Covid-19 virus,
besides potential resistance to the Oxford vaccine “AstraZeneca” is still continuing.
Some major European countries must re-take strict procedures because of increasing in Covid-19’s infections,
while vaccination programs are bonded due to concerns about side effects of the AstraZeneca vaccine,
which is widely distributed in Europe.
The slowdown in vaccinations, besides tight and strict procedures for mobility taken by some countries,
made investors restore their bleak outlook regarding the demand for oil.
England must slow down vaccinations of Covid-19 next month due to the supply crisis of delay in providing millions of AstraZeneca vaccine
from India, besides a need for 1.7 million additional doses.
According to Reuters
According to Reuters, Edward Moyai, chief market analyst at Oanda in New York,
said: “Europe faces an increase in cases of Covid-19 within 3 weeks in a row
amid some obstacles in vaccination processes”.
The vaccination process had been slow down in a number of European countries because of concerns about potential side effects.
On other hand, experts say that Europe must continue to use vaccines because risks are considered smaller than provided benefits.
AstraZeneca – safe and effective
For its part, European Medicine Agency has ensured that the AstraZeneca vaccine is “safe and effective”,
despite those side effects that have been appeared on a number of vaccinated people in Europe.
Medicine Agency said that it is not clear that these side effects are syringe-related or not.
Experts said that “Doubts about the vaccine are a major concern, but the success of vaccinations in the United Kingdom must ease some of the fears”.
The UNITED Kingdom is preparing to enter the next phase of re-opening today, which is supposed to enhance confidence in the vaccine.
US high inventories affect oil prices
US crude oil inventories rose for 4 weeks in a row after bad cold weather in Texas and the central part of the country during February,
which made operational activities in an oil refinery, out of order.
An increase in dollar price also contributed to sales of oil.
A stronger dollar makes oil more expensive for other currency holders.
The US oil production
US oil production has increased amid fuel demand decline.
The United States has also added 9 new oil platforms last week.
According to Baker Hughes company, this is the largest weekly increase since January.
Goldman Sachs said that oil market barriers were linked to European Union’s demand.
He added that Iranian supplies in the second quarter of the year will also have an effect,
although OPEC and its allies are expected to resolve this crisis.
Goldman expects a significant increase in global oil demand during the coming months.
This by its turn will lead to raising estimated prices to $ 80 a barrel this summer.
A glitter of hope
The US data indicate that the financial stimulus package may help in stimulating travel movements and traffic there,
while dozens of other countries are trying to vaccinate their citizens faster than planned in order to repel the third wave of Coronavirus.
In case of a return to travel movement in the United States,
this at least will mean the beginning of a return to normal life, besides an increase in oil demand again.
Saudi Arabia is supposed to continue its voluntary decrease to oil production by 1 million barrels in April.
This also means that there is a glitter of hope for a new price recovery.
OPEC and its allies
OPEC and its allies are supposed to meet at the beginning of next month,
so as to find out new challenges that face the oil market, in addition,
to try to reach a solution to support prices again.