Crude Oil Closed Slightly Higher on Friday

  • With the recovery of various economies to varying degrees, there has been a partial rebound in demand.
  • New York crude oil rose 7% in December, driving a rise of more than 20% in the fourth quarter.
  • OPEC+ will hold a meeting on Monday, which may further ease its production restrictions and increase the global daily supply by another 500,000 barrels.

The crude oil market ended 2020 with a positive attitude, but it still suffered a heavy setback throughout the year, only partially recovering from the decline in demand caused by the new coronavirus epidemic. The market bulls had a good momentum towards the end of the year.

Crude oil reserves

New York Mercantile Exchange, February delivery of West Texas Intermediate crude oil rose 12 cents to settle at $48.52 a barrel, the dollar rose 0.3%.

The global benchmark Brent crude oil price for March delivery on ICE European Futures rose 17 cents to close at $51.80 per barrel, an increase of 0.3%.

However, Dow Jones market data shows that the US benchmark West Texas Intermediate crude oil fell by 20.5% in 2020, which is the second annual decline in three years.

Despite this, the US benchmark crude oil futures prices rebounded sharply after closing in negative numbers for the first time in history in April. Brent crude oil fell 21.5% this year, the largest annual decline since 2015.

New York crude oil rose 7% in December, driving a rise of more than 20% in the fourth quarter. Brent crude oil prices rose by 8.9% in December, after rising by 26.5% in the fourth quarter of last year.

Stephen Innes, the chief global market strategist at Axi, said in a report, “the current level of global lockdown seems to be only an obstacle to the oil market, and traders seem to have continued the vaccine wave of economic optimism until 2021.”

The plunge of crude oil in the spring coincided with the global economic recession caused by the new coronavirus epidemic and the month-long price war between Saudi Arabia and Russia, which brought a large amount of unnecessary oil flooding to the market.

With the recovery of various economies to varying degrees, there has been a partial rebound in demand. In addition, as the Organization of the Petroleum Exporting Countries and its allies formulated production reduction measures, a rebound in crude oil was finally realized.

Robert Yawger, head of energy futures at Mizuho Securities, said in a report that although crude oil enters the new year in good condition, everything will not go smoothly in the future. At the same time, he pointed out that U.S. production is also rising.

OPEC+ will hold a meeting on Monday, which may further ease its production restrictions and increase the global daily supply by another 500,000 barrels.

Prior to this, the market had deregulated, and it is expected that the daily supply of crude oil will increase by 500,000 barrels from Friday. The organization plans to add another 1 million barrels of oil a day between March and April.

Crude oil reserves

Crude oil prices were boosted on Wednesday as US crude oil inventories fell more than expected and the US dollar weakened again.

The Intercontinental Exchange Dollar Index, which measures the exchange rate of the U.S. dollar against a basket of six major currencies, rose slightly on Thursday, after falling to a two-and-a-half-year low the day before.

A weaker U.S. dollar is often seen as beneficial to U.S.-denominated commodities, making these commodities cheaper for buyers in other currencies. The expectation of a downward trend in the U.S. dollar has boosted bulls’ expectations of further increases in crude oil and other commodities in 2021.

The U.S. Energy Information Administration (EIA) said on Thursday that it had withdrawn 114 billion cubic feet of natural gas from inventories last week. Analysts surveyed by S&P Global Platts had expected that the report would show a decrease of 123 billion cubic feet in the week ending December 25.

Among other energy sources traded on the exchange, February natural gas futures prices rose 4.8% to close at $2.539 per million British Thermal Units. The annual increase was 16%, the largest increase since 2016.

Gasoline prices fell 0.3% in January to $1.4084 per gallon, a cumulative annual decline of 17%. Heating oil fell 0.9% in January to close at $1.4763 per gallon and has fallen 27.2% this year.

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Benedict Kasigara

I have been working as a freelance editor/writer since 2006. My specialist subject is film and television having worked for over 10 years from 2005 during which time I was the editor of the BFI Film and Television.

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