Oil Mixed As Texas Output Resumes, U.S. Economic Recovery Perceived As "Uneven"

by Ship & Bunker News Team
Tuesday February 23, 2021

Oil trading on Tuesday was mixed, buoyed on one hand by coronavirus restrictions being eased due to the efficacy of the vaccines, but curbed by uncertainty over the pace of the U.S. economic recovery and the resumption of crude output from Texas.

Shortly after Jerome Powell, chair of the U.S. federal reserve, described his country's economic recovery as "uneven and far from complete," West Texas Intermediate settled down 3 cents to $61.67 per barrel; Brent settled up 13 cents to $65.37 per barrel.

That combined with Texas shale producers slowly resuming production offset optimism over the rapidly declining Covid rates, which has resulted in the UK planning to systematically lift lockdown restrictions next month and cities such as New York allowing public activities such as theatre and movie-going.

Also fuelling concern was the American Petroleum Institute reporting a 1.03 million-barrel build in domestic oil inventories, compared to expectations for a decline, although Phil Streible, chief market strategist at Blue Line Futures, downplayed the significance by pointing out, “People have been counting on continuous drawdowns, so there will be these surprise builds on occasion.”

Jittery traders aside, the analytical community continues to be bullish over the fundamental shift in economic outlook due to the vaccines: Morgan Stanley, which expects Brent to reach $70 in Q3, acknowledged that new Covid cases were plummeting and said “mobility statistics are bottoming out and are starting to improve.”

For its part, Goldman Sachs expected Brent to reach $70 in Q2 from the $60 it predicted previously, and $75 in Q3 from $65 forecast earlier.