In Andres Guerra Luz on 03/18/2021
(Bloomberg) – Oil in New York fell more than 6% due to concerns about short-term demand and the dollar’s high colliding to cause the biggest intraday drop since October.
The West Texas Intermediate fell nearly 10 %% on Thursday and is expected to extend its range of daily losses to the longest in more than a year. Brent also dropped more than 8%. The Bloomberg Dollar Spot Index rose by 0.5%, weakening the appeal of commodities priced in currency.
Futures have receded since Brent rose above $ 71 a barrel and U.S. oil exceeded $ 67 a barrel earlier this month. China has silenced its purchases, triggering the weakness of the physical market in Asia, and an unstable launch of the Covid-19 vaccine in parts of the world poses problems for a full recovery in demand in the short term.
“This is a risk-free time with some of the cyclical trades,” said Rob Haworth, senior investment strategist at US Bank Wealth Management. Oil prices are likely to “test the lower end of this trading range, because we do not have a complete global reopening. We are late with vaccines outside the US, UK and Israel, and parts of Europe are having to close again. “
The downward movement in oil may also be linked to some reversal of long positions from commodity trading consultants, as daily gains or losses in price of more than 3% can often cause this group of accounts to discharge quickly.
In addition to core prices, weather forecasts closer to oil are reflecting fragile short-term prospects. The WTI’s first month contract is being negotiated at a discount again for the following month, while Brent’s delay – a bullish structure signaling more restricted supplies – is weakening.
“Sentiment has changed,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “Short-term supply and demand considerations are temporarily casting a shadow on the bright future that is likely to come in the third quarter of the year.”
Prices:
- WTI for April delivery fell $ 5.22 to $ 59.38 a barrel at 2:15 pm in Houston, dropping for the fifth consecutive session
- Brent’s price for May fell $ 5.37 to $ 62.63 a barrel
- Brent’s futures spread has weakened in recent days
The global recovery from the pandemic remains uneven. In Brazil, Covid-19 cases are expanding in record numbers, reducing activity, while in the UK, delayed shipments of the AstraZeneca Plc vaccine will reduce supplies this month. Meanwhile, the European Union drug regulator has concluded that the benefits of the AstraZeneca vaccine outweigh the risks after several of Europe’s largest countries have stopped using vaccines this month due to concerns about blood clots.
“Demand has not returned to normal as we expected, with news about vaccines from Europe definitely worrying in terms of short-term demand,” said Michael Lynch, president of Strategic Energy & Economic Research. “This is making people think that the $ 70 Brent time has not yet come.”
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