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WTI fails to stay above $ 53 as bullish / bearish events compete for control

  • WTI managed to briefly climb above $ 53, but is now closer to $ 52.50 again.
  • It’s been another mixed day for crude oil markets as traders weigh conflicting narratives.

It’s been another mixed day for crude oil markets as traders weigh conflicting narratives. WTI managed to rally above $ 53 at one point, apparently in line with a recovery in broader risk appetite that also saw stocks rise and the US dollar fall, but has fallen back to $ 52.50 in trading. Recent Right now, crude oil is trading around 0.4% or 20 cents less on the day.

Conflicting narratives
Travel locks and bans: bearish

Fears of broader closures in the EU (Much attention has been paid to whether or not France will announce a third national shutdown after rumors over the weekend and German Chancellor Angela Merkel is facing increasing pressure since your government to impose stricter restrictions) and news of Travel Restrictions Entering the US. and the UK are exercising bearish momentum in crude oil markets. These latest updates highlight how short-term demand for fuel remains volatile as countries act to reduce rates of Covid-19 infection within their borders and to prevent the arrival of a foreign strain of Covid-19 from outside. of its borders.

China is also under scrutiny ahead of the Lunar New Year celebrations. China is acting to discourage travel ahead of the Christmas rush, which normally begins on January 28, lasts 40 days and is considered the largest mass movement of people on the planet, fearing it could spread the Covid-19 virus. The country has seen a small resurgence in cases in recent days. The lower trips for the lunar holidays this year are already negative for crude oil demand, but if the virus spreads more widely in the next month, then more Chinese regions face the lockdown, which would further affect demand. .

Covid-19 vaccine and strain updates: Mixed

AstraZeneca and Pfizer have had to reduce vaccine deliveries in recent days due to problems in the production chain. Meanwhile, there is understandable concern regarding the possibility that newly developed Covid-19 vaccines may not be effective against all variants of Covid-19. Moderna’s vaccine elicits an antibody response six times lower against the South African variant than against the original and British variants of the virus, according to the latest company numbers on Monday.

However, Moderna announced last night that it was going to begin researching a booster shot (which will arrive 6 to 12 months after the second dose) that would specifically target the South African strain and Pfizer will also study a booster dose. Meanwhile, after the release of a decent earnings report, Johnson & Johnson’s (J&J) CFO said they expect to release data from the Covid-19 vaccine trial next week and that the company is very optimistic that they will release a very robust data set. The J&J vaccine is touted as a “game changer” in the vaccination race, requiring only one injection to acquire full immunity.

Stimulus, global recovery: bullish

The longer-term outlook for crude oil markets remains broadly positive, according to most analysts, even if there are some bumps and bumps along the way; The global economy is expected to recover aggressively once the populations of the major economies have achieved a sufficient level of herd immunity for Covid-19 infection rates to be acceptably low, with the rebound (and inflation) supported by unprecedented levels of fiscal and monetary policy stimulus. The IMF just improved its forecast for global growth in 2021 by 0.3% to 5.5%, largely reflecting an improvement in US growth Crude oil market bulls expect US demand to see fueled further by another round of fiscal stimulus that Congress could pass in the coming months.

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