Futures for oil ended sharply on Friday, prompting U.S. prices to cut their gains for the week as investors weighed fresh outbreaks of COVID-19 in China, which was a driver of demand as other major economies slowed. of the coronavirus pandemic.
“The euphoria of the oil market is unequivocally strong, but Asian market indicators are mixed,” Michael Tran, an analyst at RBC Capital Markets, said in a note.
“China, the global engine of rising oil demand, is struggling with fresh outbreaks of COVID and blockages in various regions across the country have led to a reduction in discretionary leadership patterns,” he said.
China says it is now treating more than 1,000 people for COVID-19, as the number of cases rises again in the north of the country. Shijiazhuang and the cities of Xingtai and Langfang are in a virtual blockade, limiting more than 20 million people to their homes.
“China’s growing health crisis has led to a drop in oil prices as it is the world’s largest energy importer,” said David Madden, a market analyst at CMC Markets UK, in a market update. “The Beijing administration has blocked 22 million people due to the increase in COVID-19 cases, so [oil] fears of demand are circulating. ”
The overall number of confirmed cases of coronavirus causing COVID-19 rose to more than 93 million on Friday, according to data from Johns Hopkins University, while the death toll rose to more than 1.99 million. The United States has the highest number of cases in the world, at 23.3 million, and the highest number of deaths, at 388,705, or more than a quarter of the global total.
In this context, West Texas Intermediate oil for February delivery CL.1,
CLG21,
fell $ 1.21, or 2.3 percent, to $ 52.36 a barrel on the New York Mercantile Exchange.
Prices based on the first month’s contract ended the week with a modest gain of 0.2%, the third in a row, after settling at its highest level since February last year, according to Dow Jones Market Data.
March Brent gross BRN00,
BRNH21,
the global benchmark, lost $ 1.32, or 2.3%, to $ 55.10 a barrel at ICE Futures Europe, down 1.6% weekly.
“Crude has seen strong growth in the first two weeks of 2021,” said James Hatzigiannis, chief market strategist at Ploutus Capital Advisors. “However, it is now approaching levels of severe overbought.”
“
Oil prices “have risen too fast, a correction has been delayed. All bullish developments were valued. ”
”
This week, “we saw reports of a reduction in crude oil surplus, increased refinery activity and increased demand for gasoline, all developments make up for crude oil,” he told MarketWatch, but oil prices rose too quickly, a correction is outdated. All bullish developments were valued. ”
Date of Baker Hughes BKR,
On Friday, however, it revealed an increase in the number of US oil rigs for the eighth consecutive week, implying higher production ahead.
Hatzigiannis pointed out that Chinese demand could fall as the country “strategically increased its reserves” in 2020, when oil prices were historically low.
Meanwhile, some forecasts indicate that travel to the US “will not return until the third quarter of this year,” he said, adding that he expects to see a significant increase in oil demand in late spring, when infections should to begin to decline significantly.
He added that demand should see a “slight increase” in the $ 1.9 trillion stimulus package proposed by President-elect Joe Biden.
For WTI, “$ 50 is a high psychological price level” and would require “downward wholesale development for oil to fall below that level,” Hatzigiannis said.
Given the “combination of Saudi commitment to supply management and indications that we are starting to see light at the end of the tunnel when it comes to infections, I think we will stay above $ 50 in the long run,” he said.
Oil products traded on Nymex ended lower, along with oil, on Friday. February petrol RBG21,
lost 1.6% to $ 1.5284 a gallon, with prices 0.9% lower in the week, while heating oil in February HOG21,
fell 1.6% to $ 1.5929 a gallon, a nearly 0.9% weekly increase.
February natural gas NGG21,
stood at $ 2.737 per million British thermal units, up 2.7% for the session and 1.4% higher for the week.