Oil Dips On Demand Concerns, But Lockdown Non-Compliance Is Minimizing Losses

by Ship & Bunker News Team
Thursday November 26, 2020

Although optimism generated by the advent of several effective Covid vaccines remains strong, oil prices slipped on Thursday reportedly due to concern over growing supplies from Libya and in the U.S.

Brent declined 74 cents to $47.87 per barrel by 1650 GMT on Thursday, while West Texas Intermediate fell 66 cents to $45.05.

Avtar Sandu, senior commodities manager at Phillip Futures, remarked, “Despite a number of strong fundamentals rallying the markets, especially vaccine development supporting oil, bearish concerns remain.”

But Rystad Energy stated in a note that while fuel demand has fallen with the second round of lockdowns, non-compliance has translated into a smaller than expected drop in European demand: “The restrictions currently imposed in Europe – had they been adhered to widely – should have resulted in a 20 percent to 30 percent drop in activity; instead, as our real-time measurements show, we observe a drop of only around 12 percent."

Non compliance of another kind is proving to be beneficial to Venezuela: it was reported on Thursday that the Bolivian republic has resumed direct shipments of oil to China after U.S. sanctions sent the trade underground for more than a year.

The first tanker to resume transport of Venezuelan crude directly to China was the Kyoto, according to TankerTrackers.com.

Meanwhile, the optimism that has emerged over the past week thanks to the viruses continued on Thursday, with Barclays in its 2021 outlook predicting that a stock market rally would mostly be driven by earnings-per-share growth, with high-efficacy vaccines bringing the pandemic under control and a return to normality bringing about a strong upswing for cyclical stocks.

Barclays also identified its biggest overweight stock for 2021 as BP, for which it sees 63.7 percent upside potential, followed by Dutch bank ABN Amro with 50.6 percent.

Too, Barclays forecasts global GDP growth of 5.4 percent next year, the sharpest since 2010, which they project will facilitate around a 45 percent rise in earnings for European corporates.