Oil prices drifted slightly lower at the third trading session of the week on worries about energy demand in Europe, even as hopes of a recovery in U.S. oil supply chain activity were boosted by industry data that showed U.S. crude stockpiles plunged for last week.
At press time, the U.S based oil contract often referred to as the West Texas Intermediate (WTI) crude futures dropped by 0.1% to trade at $64.75 a barrel.
Brent crude futures were also down by 0.2%, to trade at $68.29 a barrel. The energy market has suffered significant losses in the past few days amid concerns about stalled vaccine rollouts slowing recovery in fuel demand.
- Leading Western European nations which include Germany, France, and Italy recently suspended usage of the AstraZeneca /University of Oxford COVID-19 vaccine over rising concerns about possible side effects. Others including Ireland and the Netherlands, have already suspended usage.
- Oil traders anticipate such delays in COVID-19 vaccine usage could potentially delay economic recovery from the COVID-19 virus and adversely affect energy demand.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the prevailing fundamentals keeping oil prices at best neutral;
“The market was wrong-footed but still pleasantly surprised after US oil stockpiles unexpectedly fell last week as a narrower weekly draw in gasoline stocks signaled that refiner activity was normalizing after a big freeze in Texas smothered production the previous month.
“However, still possibly capping near-term prices, word on the street is that China is buying close to 1mb/d of sanctioned Iranian crude at discounted prices, displacing oil from its usual suppliers, and complicating OPEC+ efforts to tighten supply and accelerate the draw-down global inventories.”
What to expect; the crude oil market is likely to remain under soft pressure from headlines that global Covid-19 infections ticked up last week and concerns over side effects within one of the primary subscribed COVID-19 vaccines.