Oil prices dropped early on Monday as a stronger U.S. dollar and many countries still battling rising daily COVID-19 cases weighed on market sentiment at the start of the week.
As of 9:14 a.m. ET on Monday, WTI Crude prices were down by 0.15 percent at $52.30 and Brent Crude was trading down 0.29 percent at $54.97, with prices down by around $2 a barrel from the middle of last week.
The lockdowns in Europe and the fairly slow start to vaccination programs in many countries outweighed early on Monday good economic data out of China, which beat analyst estimates to post 6.5-percent annual growth in its economy in the fourth quarter, compared to 6.1-percent growth expected by economists in a Reuters poll. China is also the only major economy to have posted economic growth last year, of 2.3 percent. All other major economies in the world are expected to have contracted in 2020, hit by the pandemic.
Still, China’s economic data wasn’t enough to wipe out a cautious approach to the oil market at the start of this week, as participants are still concerned that the spreading of the virus and the lockdowns will significantly weigh on oil demand in the first quarter. At the same time, vaccination programs are likely to take months before allowing a critical mass of economically active people to contribute to global economic recovery.
“Hopes about a speedy recovery in fuel demand continues to be challenged by lockdowns and the continued rapid spreading of Covid-19,” Saxo Bank said on Monday.
Moreover, the upcoming presidential inauguration in the United States on January 20 also makes investors more cautious, PVM Oil analyst Tamas Varga told Reuters.
Saxo Bank sees President-elect Joe Biden’s inauguration as another factor to watch in oil this week, as well as how soon he could roll out the stimulus package announced last week.
This is ridiculous. They drop because we had a really nice run with daily RSI's getting above 70 and the weekly nearly touching 70. With prices above 50 on wtic, for the first time in many months, producers took advantage and sold enmass. looking at the cot report, commercials increased there short by 60,000 in the past 2 weeks and also very bearish, the gap between small longs and small shorts is very close to the top over the past 20 years. (meaning small traders are very heavily long)
AND to top it off, oil is down $0.30 which for oil is just white noise.
Wait, wait, wait!
Richard.
Are you telling us you're bearish oil right here?
Asking for a friend.
Biden has claimed that he will stop oil and natural gas production in the US. Back to dependency on foreign oil.
Yes, I am slightly bearish at this time. Not much. Maybe a drop to $49 and then back up.
The American Petroleum Institute (API) reported on Tuesday a build in crude oil inventories of 2.562 million barrels for the week ending January 15.
Analysts had predicted an inventory draw of 1.167 million barrels for the week.
In the previous week, the API reported a draw in oil inventories of 5.821-million barrels, after analysts had predicted a draw of 2.266 million barrels.
Oil prices were mixed on Wednesday ahead of the data release, with WTI up and Brent down. A widespread lockdown in China that has sequestered millions of residents out of concern for an increase in coronavirus cases there, the IEA's grim outlook on oil demand, a slow global rollout of the coronavirus vaccine that has been plagued with technical problems as well as reports of adverse effects, and a lingering U.S. stimulus high as investors dream of increased economic activities and are emboldened to sink money into riskier endeavors—like oil—all contributed to a muddy-water effect for the commodity.
An hour before Wednesday's data release, WTI had risen by $0.30 on the day (+0.57%) to $53.28, up a modest $.015 since last week.
The Brent crude benchmark, on the other hand, had fallen on the day $0.05 at that time (-0.09%) to $56.55—down $0.70 on the week.
U.S. oil production has stagnated at 11.0 million bpd, according to the latest data provided by the Energy Information Administration, and there is unlikely to be any significant increase to U.S. oil production while stocks remain high—higher than a few million barrel draw could correct.
The API reported a build in gasoline inventories of 1.129 million barrels for the week ending January 15—compared to the previous week's 1.876-million-barrel build. Analysts had expected a 2.771-million-barrel build for the week.
Finishing off the inventory builds for the week is distillates, which saw an increase of 816,000 barrels for the week, adding onto last week's 4.433-million-barrel increase, while Cushing inventories saw the only decrease this week, falling by 4.285 million barrels.
At 4:34 p.m. EDT, the WTI benchmark was trading at $53.28, while Brent crude was trading at $55.97.
we did have a nice drop in crude after I posted this but it does not look like we will make it to $49.
At 1st some in the market assumed more oil would have to come from other than Canadian sources due to Keystone cancellation
But those who trade and know the oil market, vs small specs acted differently
Did you know Canadian oil amounts to a tad over 50% of all foreign supply
Also there are several other pipelines in use and those will be expanded for more capacity. How I don't know but it seems to be a given that Canadian oil will reach USA markets one way or another. Cost of some movement may be on hold, as too expensive due to Keystone but the oil will come by other means
I am I bit disappointed in Warren Buffet. Looks like his healthy donation to Biden paid off as his rail way will be fully utilized moving oil
IMHO Keystone was more of a PR to the extreme left in Biden's base rather then an effort to stop the flow of oil
I suppose optics matter in politics