(Bloomberg) Oil futures edged lower as the dollar rose, while physical crude prices in Asia continued to weaken.Premiums for Russia’s ESPO crude, a favorite of refiners in Asia, have fallen by more than $1 since last month, according to traders who asked not to be identified. A flurry of new Covid cases in China and flare-ups in other major regional consumers like Japan are menacing demand and threatening a recent rally in futures. India also got off to a shaky start to the year, with sales of transport and cooking fuels dropping.
While a second daily rise in the dollar forced oil lower on Monday, other data helped prevent a steeper decline. Chinese refiners processed record volumes of crude in December — about 14 million barrels a day — in a sign of just how strongly consumption in the world’s largest crude importer had rebounded into the end of last year. With OPEC+ output cuts and the rollout of Covid vaccines, that had helped push prices to a 10-month high at the start of 2021.
“The virus will be beaten, and the foundation of economic recovery was laid down in the second half of last year,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. As a result, the pullback in prices “might prove to be short-lived,” he said.
West Texas Intermediate for February delivery dropped 0.2% to $52.27 a barrel as of 8:47 a.m. in New York
Most CME products will halt at 1 p.m. New York time due to the Martin Luther King, Jr. day holiday
Brent for March settlement declined 0.4% to $54.87
Libya’s oil output, meanwhile, has dropped by about 200,000 barrels a day because of a leaking pipeline. The decline underscores how difficult it is for the country to maintain production after almost a decade of civil war.
Volumes of crude stored at sea are also continuing to fall as the market rebalances. Floating storage slipped to 80 million barrels last week, according to Vortexa Ltd, the lowest since April.
Other oil-market news
The cold snap that’s pushed liquefied natural gas prices to record highs is also roiling LPG, leading to shortages of the gas that’s used for heating and cooking as well as being a feedstock for petrochemical plants.
President-elect Joe Biden may fulfill a pledge to cancel the Keystone XL pipeline permit via executive action on his first day in office, CBC News reported.
Iraq sold oil at a slower pace in the first half of January than the December average even as the OPEC+ group eased production curbs at the start of the year.
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