An oil pump jack, also known as a “nodding donkey”, at the Rosneft oil company’s oil field near the village of Sokolovka in the Udmurt Republic of Russia on Friday, November 20, 2020.
Bloomberg | Bloomberg | Getty Images
Oil prices fell to a six-week low on Friday as the blockade of the new Covid raised demand concerns, just as industry players suggested a recovery in supply.
However, for consumers who are looking for some leeway in their pumps, it is unlikely that a fall will soon lead to lower gas prices. According to AAA, the national average of one gallon of gas was Friday’s seven-year high of $ 3.41. That’s up from $ 3.34 a month ago and $ 2.12 last year.
US benchmark for oil It has fallen by more than 4% to a session low of $ 75.37, a price not seen since October 7.
Crude oil traded in the green earlier that day, but fell into a negative territory following the news of the Austrian blockade. Demand recovery is a major driver of oil recovery this year, and signs that it may unravel will surprise market participants.
“The market is still basically in a good position, but if other countries follow Austria’s leadership, the blockade is a clear risk to this,” said Craig Ahram, senior market analyst at Oanda. .. “Movements below $ 80 could deepen the correction and possibly pull prices back towards the mid- $ 70 region,” he added.
December futures contracts expire today, with more actively trading contracts delivered in January down 3.8% to $ 75.44 a barrel. Brent crude oil futuresThe International Benchmark was traded at a low of $ 78.15 for the first time since October 1.
Both WTI and Brent are on track for the fourth straight week of losses. This is the longest weekly loss since March 2020.
“A slight drop in gas demand, probably due to seasonal changes in driving habits, has helped to ease pump prices,” a AAA spokeswoman said on Monday. Instead of dropping it for a while. “
Friday’s decline is the largest oil since July, but commodities have been declining over the past few weeks. The Biden administration has repeatedly stated that it is looking for ways to reduce the burden on consumers of high oil prices in the form of gas prices, which have been at their highest levels in seven years. One option is for the government to utilize strategic petroleum reserves.
“If the U.S. presidential government wants to get the attention of the oil market, all eyes are on Washington to see if a follow-up collaborative effort to put further downward pressure on oil prices signals a Chinese SPR release. So I have it now. ” Louise Dixon, Senior Oil Market Analyst at Listad Energy. “Since the summer, the United States has been publicly investigating oil markets, especially OPEC +, to facilitate supply and ease prices, as well as other importing countries such as China, India and Japan. [are] Join the chorus. “
That said, analysts point out that releasing oil from SPR will have little long-term impact.
“Such a decision will result in a price setback, but SPR can only close the gap between temporary production turmoil and cannot fix the structural problems of underinvestment and rising demand. “UBS said in a note to clients on November 5th.
In addition to political headwinds, oil is also facing pressure from increased supply as producers, including the United States, bring production online.
Oil rose steadily throughout 2021, and WTI reached a seven-year high of $ 85.41 on October 25. Since then, it has fallen 11.5%. Despite recent weaknesses, US oil will continue to rise 55% in 2021.
Oil falls to a six-week low due to blockade concerns
Source link Oil falls to a six-week low due to blockade concerns
The post Oil falls to a six-week low due to blockade concerns appeared first on Eminetra.