The oil derrick pump is operating in the Inglewood field in Culver City, California, on Sunday, July 11, 2021.
Kyle Grillott | Bloomberg | Getty Images
Oil prices soared on Monday as traders bet it Friday plungeIt was overkill, driven by concerns that the new Omicron Covid variant might curb demand for petroleum products.
West Texas Intermediate Crude Oil FuturesThe US oil benchmark rose $ 1.80 (2.6%) to settle at $ 69.95 per barrel. Early in the session, it traded as high as $ 72.93, but contracts fell across the session and failed to maintain the key $ 70 level.
WTI fell 13% on Friday as the worst day since April 2020. It was also below the 200-day moving average (a closely tracked technical indicator) for the first time since November 2020.
Brent crude oilThe International Oil Benchmark was settled at $ 73.44 per barrel, up 0.99%. Friday’s contract fell 11.55%, recording a fifth straight week of losses with WTI.
“Friday’s price cuts were excessive,” said an analyst at Commerzbank. “Sure, the Omicron variant has fueled demand concerns, but it’s still impossible to give serious numbers about how this really affects demand.”
Even before Friday’s plunge oil was on a downtrend, after WTI hit a seven-year high in October above $ 85. Brent crude oil hit a three-year high last month.
Given the strong 2021 rebound in oil, RBC analysts added that some of Friday’s sellouts could be due to traders fixing their profits.
“At least some of the air pockets that went down on Friday were potentially mitigating the risk of the year,” the company said in a note to customers on Sunday. “After 11 months of strong pricing, oil traders want to mitigate risk and protect their nest eggs, rather than fighting the flow of market-moving events like COVID.”
The oil seesaw move precedes an important meeting between OPEC and its oil-producing allies, and the group decides on a production policy for January. Known as OPEC +, the alliance returns 400,000 barrels each month to the market to eliminate the historic April 2020 production cuts as demand for petroleum products declined due to the pandemic.
In addition to the latest price behavior, the group will assess supply and demand trajectories after the US and other countries announced plans last week. Tap Strategic Petroleum Stockpiling To curb a sharp rise in fuel costs. The Biden administration said the United States would release 50 million barrels from SPR.
Wall Street is divided on what OPEC + may announce when it meets Thursday. “Uncertainty about Omicron will shelve OPEC’s goal of increasing production and keeping quotas flat in January,” Morgan Stanley wrote in a note to customers.
Meanwhile, Citi predicts that OPEC + will “maintain the line and stick to the planned 400 kb / d quota increase.”
— CNBC’s Michael Bloom contributed to this report.
Oil surges and regains some losses after the worst days of the year
Source link Oil surges and regains some losses after the worst days of the year