(Bloomberg) Oil slipped below $58 a barrel in New York as a recent rally fizzled on strength in the dollar.Futures fell for a second session, after their longest rally in two years. The enduring pandemic continues to crimp fuel consumption from China to the U.S., with the International Energy Agency cutting its demand forecast for 2021 and describing the market as fragile. The U.S. government earlier this week also predicted the nation’s petroleum demand will likely need much more time to recover.
Despite the bearish sentiment, oil is still set to eke out a weekly gain and some are optimistic on the longer term outlook, including the IEA. Bank of America became the latest institution to add to a chorus of bullish voices, saying that demand could rise at its fastest pace since the 1970s over the next three years.
Oil’s rapid rebound from the depths of the Covid-19 pandemic has accelerated this year after Saudi Arabia pledged to deepen output cuts. Prompt timespreads have widened in a bullish backwardation structure, helping to unwind bloated stockpiles held in onshore tanks and on ships.
West Texas Intermediate slid 0.7% to $57.81 at 10:40 a.m. London time
Brent for April settlement lost 0.6% to $60.76
“Based on fundamental analysis, the case for further price gains is hard to make, although we are seeing optimism in financial markets in general,” said Hans van Cleef, senior energy economist at ABN Amro. “We think that much higher oil prices are not sustainable and that oil producers will then start to increase production.”
Other Oil Market News:
Trading volumes Friday were largely below average as parts of Asia observed the Lunar New Year holiday. Brent and WTI volumes were both down more than 20% on the average for the last thirty days.
Exxon Mobil Corp., Chevron Corp. and ConocoPhillips had their credit ratings lowered after S&P Global Ratings followed through on its recent warning and revised the industry’s risk profile due to climate change and weak earnings.
European air traffic has been higher than forecast for the first ten days of February, though is still well down versus the same period in 2019, according to a report from Eurocontrol.
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