Crude oil prices closed the last trading day of the week on a bearish note. The prices dropped by more than 1% on Friday as the global economy continues to falter due to renewed COVID-19 restrictions in some vital economic hubs around the world.
Brent crude futures settled at $44.35 a barrel, down 55 cents or 1.2%. Also, America’s West Texas Intermediate futures settled at $42.34 a barrel, falling by 1.1%.
Brent fell about 1% for the week, while WTI saw a weekly rise of nearly 1%.
It seems like the current market observation concerning the steep decline in volatility in the crude oil price continues to hold. The oil Vix measure of volatility is now back to mid-February levels.
Stephen Innes, Chief Global Market Strategist at AxiCorp gave insights on OPEC+ strategy in stabilizing crude oil prices. He said:
“The Joint Ministerial Monitoring Committee (JMMC) continued to focus on reigning in laggards, which should be supportive for prices. And although Iraq has made progress but remains above quota, Nigeria is still significantly over-producing. It has been given until August 28th to deliver detailed plans for coming into compliance and over-compensating for their failure to cut production so far.
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“Industry reports estimate that 1.2mb/d of additional cuts through August and September are needed to offset oversupply to date, implying OPEC+ cuts fall to 8.9mb/d in the current phase instead of the 7.7mb/d target.
“But with enforcement tactics reduced to merely public smearing of laggards or a very unlikely disbanding of the agreement, the proof will need to be in the pudding as it remains critical that non-compliant members toe the line to bring the markets closer to equilibrium.”
Oil traders weigh if COVID-19 support programs will buoy economic growth
Brent oil crude futures gained 0.40% to trade at $54.95 while WTI futures were dropped 0.23% to trade at $52.30 a barrel.
Oil prices were mixed at the second trading session of the week. Oil traders are cautiously optimistic that further COVID-19 stimulus programs will buoy economic growth against the increasing COVID-19-induced lockdowns sighted in key international markets.
What you should know
At press time, Brent oil crude futures gained 0.40% to trade at $54.95, while West Texas Intermediate futures dropped by 0.23% to trade at $52.30 a barrel. There was no oil settlement transaction on Monday at the world’s largest economy, due to public holiday.
- Both global oil benchmarks remained above the $50 mark.
- In addition, oil traders are treading cautiously on reports that the third-largest crude oil importer, India, recorded poor fuel sales in 2020, as well as rising numbers of COVID-19 cases in Japan and China.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, dropped valuable points as regards macros weighing the black liquid hydrocarbon, taking to account the U.S dollar recorded losses at Tuesday trading session, thereby arbitrarily supporting crude oil prices.
- “Many COVID-19 jitters out here, but oil prices continue to hold and looks to nudge higher eyeing support from the weaker US dollar as oil sensitive currencies are showing the way. The US data has been less encouraging lately. However, yesterday’s Q4 China GDP data provided a festive reminder that China’s economy continues to fire on all cylinders and brought with it dip-buying support.
- “Overall, the policy mixes between OPEC+ current supply discipline coalescing with the Biden’s administration’s overarching focus on public health and economic responses to the COVID-19 pandemic, suggest oil prices can go much higher.”
What to expect
Oil traders anticipate that oil prices will stabilize near the current level, as progress is made on the COVID-19 vaccine roll-out. As the black liquid hydrocarbon moves closer on the path to a typical demand environment, oil prices will then soar.
Gold prices stay firm, investors await Janet Yellen’s speech
Gold futures were up 0.38% at $1,836.80/ounce after hitting the lowest point since December 2 yesterday
Gold prices were firm at the second trading session of the week.
The yellow metal is bouncing from its one-and-a-half-month low seen at the last trading session. Gold bugs are going long on hopes for further stimulus programs to boost economic recovery from COVID-19.
What you should know
At press time, Gold futures were up 0.38% at $1,836.80/ounce after hitting the lowest point since December 2 yesterday.
- Gold traders await statements from Secretary of the Treasury nominee, Janet Yellen, on U.S. stimulus programs and the U.S dollar during her Senate confirmation scheduled to hold today.
What they are saying
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave insights to the yellow metal price movement and the odds of breaching above $1,860/ounce.
- “Gold prices recovered from lows yesterday before trade volumes dropped off, with markets closed in the US, and we ended up with a hammer candlestick.
- “Spot had fallen significantly earlier but found good support near $1800. If gold can break $1840 convincingly, keep an eye on $1860. The further upside from there might be a struggle if the US dollar continues to climb. Although some market participants may have turned bearish in the short-term, there could be an unexpected rally.”
What to expect
Present price actions in the precious metal market will be choppy this week. Gold traders in the coming days will monitor key geopolitical drivers such as the Treasury Secretary nominee Janet Yellen’s testimony, and US president-elect Biden’s inauguration.
Oil prices tumble on fears of global economic recovery
Brent crude futures dropped about 1%, to $54.65 a barrel, after losing 2.3% on Friday.
Oil prices dropped at the first trading session of the week.
Oil traders are virtually going short, with the global market’s economic recovery outlook being called into question as COVID-19 infections rise.
What you should know: At press time, Brent crude futures dropped by about 1%, to $54.65 a barrel, after losing 2.3% on Friday. West Texas Intermediate futures lost about 1%, at $51.93 a barrel, having declined 2.3% also on Friday.
Increasing COVID-19 caseloads throughout the world continued weighing on oil prices, as oil traders doubted how long energy demand would hold up.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave key insights on macros weighing on oil prices
“Oil prices struggled from the mid-week after swelling production inventories then fused with the return of COVID in China, providing a not-so-rosy near-term demand signal. And adding for downside drift to the flow the slow roll-out of vaccines globally is walking back the timeline for jet fuel demand to take off.
The US dollar is strengthening due to the confluence of continental dilemmas. The global “risk-off” tone is also attracting US dollar safe-haven demand. A stronger US dollar seldom if ever makes for good bedfellows with higher oil prices.”
What to expect: Still, it remains crucial for OPEC+ to monitor the demand variables around lockdowns and stay responsive to changing conditions. Underlying demand will not approach normal levels until 2022 at the earliest, and vigilance from OPEC+ will continue to be important in supporting oil prices.