Crude Oil prices dropped deeper at the second trading session of the week in London.
This is coming after heavy losses from the Monday trading session, as a new strain of COVID-19 virus shutdown major economies in Western Europe.
The fast-spreading new COVID-19 strain has already shut down a larger part of the United Kingdom and also prompted many countries to close their borders to English travellers and in some cases their goods.
- At the time of writing this report, Brent crude futures were down more than 2% trading below $50/barrel.
- U.S. West Texas Intermediate (WTI) crude futures also lost over 2%, to trade at $46.73 a barrel.
Both major benchmark contracts plunged by 3% yesterday, partly wiping recent strong gains on the back of the rollout of COVID-19 vaccines, seen as key to easing human mobility restrictions.
What you should know about the oil price flux
Stephen Innes, Chief Global Market Strategist at Axi, further dug deeper into recent macros weighing heavily on oil prices,
- “Oil slid and then finally crashed off the end of the reflation runway before bargain hunters helped lift Brent crude back above $50.00. The nefarious mobility restriction linked sell-off saw both grades drop about 6% amid the new super -spreading strain of the virus, which sees politicians mandating more mobility restrictions in most of Europe. And with the UK at the epicentre, it triggered absolute border pandemonium.”
What to expect
Oil traders anticipate significant sell-offs at today’s Oil trading session as all those bullish synergies around reflation and a weaker US dollar are reversing a touch with the latest chaos in the UK on the back of the mutant strain of the virus.
Oil prices drop as gasoline demand from U.S refineries remain poor
Oil prices suffered significant losses at the mid-week trading session in London.
Oil prices suffered significant losses at the mid-week trading session in London. Oil traders are virtually going short on macros revealing an unexpected build in U.S. crude inventories.
The surge in U.S oil inventories was attributable to the unprecedented cold snap that hit a key energy hub in the world’s largest economy during the previous week thereby pausing gasoline demand from refineries that were forced to close down.
At the time of writing this report, Brent crude was down 0.60% hovering around the $64 per barrel.
However, both major oil benchmarks remained above the $60 price levels.
The most recent data from the American Petroleum Institute revealed a surge of 1.026 million barrels for the week ending Febuary.19. Oil experts had earlier anticipated a 5.372-million-barrel drop.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on prevailing market conditions weighing on the black hydrocarbon
“With excessively stretched positioning and highly susceptible to any negative news, WTI dropped towards the $61 level after the API stockpiles jumped +1.026 million barrels versus the previous draw of 5.8 million barrels during the period ended on February 19.
“Although the commodity prices dropped following the bearish stockpile data, bulls probably won’t be charging back to the pen en masses as the smoldering embers around the Middle East powder keg threaten to ignite once again as the US-Iran conflict continues to simmer but at a higher heat level today.”
What to expect: Still, Oil pundits expect more visibility on oil traders move at the end of next week with the next round of monthly OPEC+ meetings. Outside of a rise in geopolitical risk, upside momentum could be limited in the coming days as oil traders wrestle with OPEC+ next move.
Gold maintains shine after advancing for two days
The bullion asset regained its lustre after a 2.2% drop recorded in the past week,
Gold stayed on course at the second trading session of the week after advancing for two days, as metal traders awaited testimony from U.S Fed Chief, Jerome Powell.
At the time of drafting this report, the bullion asset traded at $1,807.24 an ounce after rising 1.9% over two days.
The U.S Fed Chief’s semi-annual report at the U.S congress today and the next day will be monitored by metal traders for further policy guidance, and his assessment of the economic recovery at the world’s largest economy.
The bullion asset regained its lustre after a 2.2% drop recorded in the past week, as traders refocus on rising inflation expectations.
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave valuable insights on how the precious metal managed to stay above the $ 1,800-ounce price level.
“It was a strange world seeing the commodity locomotive racing at full steam, but gold left-back at the station. But correlations are looking more normal today after yesterday morning signal gold was trading slightly higher in delayed response to USD weakness. A weaker US dollar remains one of the primary lift-off balloons.
Gold built on Friday’s modest rally, clearing and holding above the USD1,800/oz level. USD weakness was likely the key factor behind gold’s recovery.”
What to expect: The U.S congress may vote on the US$1.9 trillion stimulus package in the coming days, which should hold gold’s appeal as inflation concerns and reflation appeal suggest gold is a good hedge.
Nairametrics | Company Earnings
- 2020 FY: Zenith Bank post N230.6 billion profit after tax
Zenith Bank Plc released its […]
- Mutual Benefits Assurance Plc boosts post tax profits by 25.9%
Mutual Benefits Assurance Plc released […]
- 2020 FY Results: Prestige Assurance Plc reports a 50.44% increase in profit.
Prestige Assurance Plc released its […]
- John Holt falls deeper into losses
John Holt Plc released its […]
- Sales volumes crash for Northern Nigeria Flour Mills Plc
Northern Nigeria Flour Mills Plc […]