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.
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.