Oil Holds Loss Near $60 on Demand Worries Before OPEC+ Meeting

© Reuters.

(Bloomberg) — Oil held losses in early Asian trading amid concern over near-term demand and dollar strength ahead of a closely watched OPEC+ meeting this week at which the group will decide on output policy.

Futures traded near $60 a barrel after dropping 1.6% Tuesday. An OPEC+ technical panel agreed to revise down the group’s oil-demand estimates for the year, delegates said. The dimmer outlook in the coming months comes as rising virus cases and renewed lockdowns look set to slow the global recovery.

The Bloomberg Dollar Spot Index rose to the highest since November on Tuesday, reducing the appeal of commodities priced in the currency. Industry data presented a mixed picture of U.S. stockpiles. Crude inventories rose by 3.91 million barrels last week but gasoline stocks fell by 6.01 million barrels, the American Petroleum Institute reported, according to people familiar.

Oil prices have pulled back in recent weeks as the Covid-19 situation deteriorates in parts of the world ahead of a widely anticipated demand rebound once enough people are vaccinated. Stricter lockdown rules in parts of Europe are showing up in traffic data and fuel use, while in the U.S., data from OPIS by IHS Markit show gasoline sales trailing pre-pandemic levels by 16%.

The price retreat also is a symptom of a rally that may have gotten ahead of itself, with global benchmark futures surging above $71 a barrel earlier this month before the abrupt pullback. Crude at $70 destroys demand at a “faster pace,” and the market is still facing a lot of oil inventories, Total SE Chief Executive Officer Patrick Pouyanne said at an online conference.

READ  Gold Advances After Fed Maintains Dovish Line on Interest Rates

All eyes are now on OPEC and its allies, who will consider whether to revive part of the 8 million barrels of daily output — about 8% of global supply — that they’re withholding. At their last gathering, the group had been widely expected to return some barrels to the market but, led by Saudi Arabia, opted not to do so given the sustained threat posed by the pandemic. The producer alliance is expected to maintain curbs to deplete global inventories further.

©2021 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Please enter your comment!
Please enter your name here