But PVM suspects the pull-back may be short-lived: File Image/Pixabay
Strong economic data from China and a drop in output from Libya proved to be no match for fears over rising Covid rates globally, which once more caused a dip on Monday in oil prices, albeit minimal.
After data showing China's economy picked up speed in its recovery from the pandemic, and following Libya's Waha Oil Company reducing production by up to 200,000 barrels per day (bpd) due to maintenance, Brent declined 23 cents at $54.87 per barrel and West Texas Intermediate fell 19 cents to $52.17.
In addition to an economic pickup, a rebound in domestic fuel demand in China enabled that country to post record throughput in 2020 and process 3 percent more crude oil than a year ago.
Bjornar Tonhaugen, Rystad Energy
The comeback for oil demand will be slow
More good news that failed to offset pessimism was volumes of crude stored at sea: floating storage slipped to 80 million barrels last week as the market rebalances, according to Vortexa Ltd., the lowest since April.
But even though India has embarked on a fast-track campaign to vaccinate 300 million people and 30 percent of Israel has already been inoculated, crude analysts were mainly disappointed by the vaccine rollouts, and this in turn affected Monday's trading performance: Bjornar Tonhaugen, head of oil markets at Rystad Energy, complained that "Vaccination campaigns, although ongoing, are lagging the speed needed to fast-track a global recovery in the first quarter and the comeback for oil demand will be slow."
John Kemp, commodities analyst for Reuters, noted that while hedge funds boosted their bullish petroleum positions last week by the equivalent of 51 million barrels, betting on continued output restraint and an early resumption in business activity, "they sold middle distillates, likely reflecting concerns about a slower re-opening of international borders and return to aviation, even as coronavirus vaccines are rolled out."
However, presumably due to studying the actual rates of inoculations globally, Tamas Varga, an analyst at PVM Oil Associates Ltd., bucked the analytical trend and struck a distinctly upbeat note on Monday by stating, "The virus will be beaten, and the foundation of economic recovery was laid down in the second half of last year," and the added that the pullback in prices "might prove to be short-lived."