Meanwhile, China extends aid to cash-strapped oil producers by dealing with Iraq: File Image/PixaBay
Oil prices were mixed on Tuesday as traders wrestled with two familiar issues: the return of government lockdowns in some parts of the world to battle Covid infections, and the UK commencing vaccinations against the disease - with the U.S. possibly following suit within the next few days.
The former concern seemed to prevail, causing Brent on Tuesday to settle up a mere 5 cents at $48.84 per barrel and West Texas Intermediate to settle 16 cents lower at $45.60 per barrel.
Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, "There's been this back-and-forth between being concerned about the lockdowns for the next few weeks and the expectations for a vaccine coming sooner than anyone had anticipated, which is giving us support."
Jay Hatfield, CEO, InfraCap
The key for oil demand is to get the pandemic under control by the summer travel season
Traders also monitored lawmakers' efforts in the U.S. to approve a new economic stimulus package that would presumably boost jobs growth and energy demand, with Friday eyed as a possible deadline.
Meanwhile, the Energy Information Administration reported that U.S. crude oil production is expected to fall by 910,000 barrels per day (bpd) in 2020 to 11.34 million bpd, a bigger decline than a previously predicted drop of 860,000 bpd; this dovetails with a Reuters poll of analysts forecasting a drop in crude inventories and a rise in refined product stockpiles when government data is released on Wednesday.
The EIA on Tuesday also cut its 2021 world oil demand growth forecast by 110,000 bbpd to 5.78 million bpd; additionally, the agency cut its oil demand growth estimate for 2020 by 240,000 bpd to 8.85 million bpd.
As for thoughts on oil trading in the near term, Jay Hatfield, CEO at InfraCap, struck an optimistic tone on Tuesday by stating, "The key for oil demand is to get the pandemic under control by the summer travel season; you're going to have some bad Covid headlines, but every bad Covid headline seems to be paired with a good vaccine headline."
Peter McNally, global head for industrials, materials and energy at Third Bridge, added ,"For demand to continue to pick up, a big part of that is going to be travel and an open economy; that goes back to vaccines."
Finally, the latest example of China lending aid to struggling oil producers such as Angola, Venezuela, and Ecuador with repayment in oil barrels rather than cash is Iraq, according to Bloomberg: while the deal is yet to be concluded, sources told the news agency that the Iraqi agency in charge of petroleum exports, SOMO, picked ZhenHua, for pay upfront for one year of supply that would bring in more than $2 billion.