Photographer: Luke Sharett / Bloomberg
Photographer: Luke Sharett / Bloomberg
Brent crude gave up some gains at the end of the worst week since October, with the dollar strengthening and investors looking at short-term demand prospects.
London futures fell 1%, dropping to less than $ 64 a barrel, with the rise in the dollar reducing the appeal of commodities priced in the US currency. Demand is showing some signs of weakness with the number of unsold oil cargoes from West African oil cargo swelling, while Germany is proposing an extension to blocking restrictions. Despite posting a 2% gain on Friday, oil suffered a big weekly loss after a bearish start last week.
See too: Oil is still on a difficult road to recovery, despite price variation
Saudi Arabia, meanwhile, has seen another attack on its energy facilities. While the offensive by Iran-backed Houthi rebels in a The Aramco refinery on Friday had no impact on oil supply, it is the most recent in a series of attacks on the kingdom.
Despite the weekly drop, there is confidence in the long-term outlook and a return to higher prices. Goldman Sachs Group Inc. said that the recent settlement was transient and that the the rebalancing would continue with vaccinations promoting greater mobility. The market will be watching the OPEC + meeting next week for any changes in its production policy in May, especially after the oil slump and comments from the International Energy Agency that the offer is plentiful.
“Oil may continue to oscillate between red and green, being divided between fears of demand and obstinate optimists,” said Vandana Hari, founder of Vanda Insights in Singapore. Prices “are likely to fluctuate around current levels, at least until the next OPEC + movement,” she added.
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The immediate time for Brent is still on a bullish backlash – where near-dated prices are more expensive than the most recent ones – although the gap has narrowed over the past week. The spread was at 16 cents a barrel on Monday, compared to 67 cents at the beginning of the month.
Iran’s supreme leader, Ayatollah Ali Khamenei, meanwhile, said his country is in no hurry to revive the nuclear deal, although he reiterated that Tehran was still prepared to return to the original terms of the deal once the US lifted sanctions. Despite the penalties, Iranian Oil exports appear to be increasing, with China increasing its purchases recently.
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– With the help of Rob Verdonck