Oil eases after record rally as OPEC, IEA fret about demand
Shafaq News/ Oil prices eased on Thursday, ending a record streak of gains, after both OPEC and the International Energy Agency (IEA) said renewed lockdowns and the emergence of new coronavirus variants reduced the prospect of a swift demand recovery.
Brent futures fell 0.74%, to settle at $60.69 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 0.77%, to settle at $57.79.
On Wednesday, Brent rose for its ninth straight session, tying the benchmark’s record winning streak last hit in January 2019. It was also hit in April and September of 2007. WTI marked its eighth consecutive day of gains, its longest such streak since January 2019.
Both benchmarks closed on Wednesday at their highest levels since January 2020, and on Thursday remained in overbought territory with a Relative Strength Index (RSI) over 70 for an eighth day in a row.
“Crude prices are taking a moment after the February breakout took prices above levels some analysts thought couldn’t be touched until a couple years down the road,” said Edward Moya, senior market analyst at OANDA in New York.
World oil demand in 2021 will rebound more slowly than previously thought, the Organization of the Petroleum Exporting Countries (OPEC) said. The IEA said global oil supply was still outstripping demand, but COVID-19 vaccines should help demand recover.
“The (IEA) agency’s remarks do work as another reminder that oil is not out of the woods yet and that it is premature to overvalue it when the only thing that keeps prices at healthy levels is an artificial supply cut by OPEC and allies,” Rystad Energy’s head of oil markets Bjornar Tonhaugen said, noting the slow pace of the oil demand recovery.
Oil prices have gained in recent weeks as OPEC and allies in OPEC+ reduced output and Saudi Arabia pledged additional voluntary cuts.
The IEA said a rapid stock draw expected in the second half of the year could set the stage for OPEC+ to start unwinding the supply curbs.
Further price pressure came from an increase in oil output in Argentina and an expected increase in supply from Libya following the end of a blockade at the port of Hariga.
The continuous struggle caused by the emerging variants of the virus and doubts about vaccine effectiveness also dampened sentiment. A British scientist said the coronavirus variant found in the county of Kent is likely “to sweep the world.”