Oil Down on Stronger Dollar
(Bloomberg) -- Oil dropped as the dollar strengthened, adding more volatility to the market which is facing a mixed demand outlook after a recent rally.
Futures in New York slid 0.8% and are set for the biggest weekly loss since December. The demand picture remains uneven across various regions, with Indian fuel sales falling in February amid higher pump prices, while demand is climbing in America and the U.K. A huge U.S. stimulus package lifted broader sentiment, but wasn’t enough to spur further gains in crude as a rising dollar reduced the appeal of commodities priced in the currency.
“The latest rally is starting to feel fragile,” said Vandana Hari, founder of Vanda Insights in Singapore. “Once sentiment from the U.S. stimulus moves into the rearview mirror, we could return to inflation worries and skittish financial markets. That casts a bearish shadow on the oil complex.”
Oil has rallied more than 35% this year as the market tightens due to output cuts from OPEC+ members and as the rollout of vaccines spurs optimism over the demand outlook. Sustained higher prices, however, might encourage a surge in U.S. production by shale drillers in a move that would add to supply concerns amid sharply-rising flows of Iranian crude into China.
The availability of crude cargoes, meanwhile, remains tight due to the OPEC+ curbs. Some oil processors in Asia will get less crude than they asked for next month from Saudi Arabia as the producer extends its unilateral output cuts. Three refiners will receive almost 20% less supply than requested.
Prices |
|
The prompt timespread for Brent was 61 cents a barrel in backwardation -- a bullish market structure where near-dated prices are more expensive than later-dated ones -- compared with 68 cents a week earlier.
OPEC on Thursday sounded a note of caution on the outlook, trimming its forecasts for the amount of crude it will need to pump over the next two quarters. All eyes will be on an International Energy Agency report next week, which will publish forward-looking demand forecasts, while the market will also be watching for clues on the health of the U.S.-China relationship following a high-level meeting set for March 18-19 in Alaska.
Other oil-market news: |
|
--With assistance from Andrew Janes.
© 2021 Bloomberg L.P.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- Oman Sees Increasing Ship-to-Ship Transfers of Russian Oil Bound for India
- Ithaca Energy Studies Deal for Eni's UK Upstream Assets
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- McDermott Settles Reficar Dispute
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Equinor Makes Discovery in North Sea
- Standard Chartered Reiterates $94 Brent Call
- India Halts Russia Oil Supplies From Sanctioned Tanker Giant
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Centcom, Dryad Outline Recent Moves Around Red Sea Region
- PetroChina Set to Receive Venezuelan Oil
- Czech Conglomerate to Buy Major Stake in Gasnet for $917MM
- US DOE Offers $44MM in Funding to Boost Clean Power Distribution
- Oil Settles Lower as Stronger Dollar Offsets Tighter Market
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension
- Equinor Makes Discovery in North Sea