Oils Rises On Strength Of Brexit Deal As Analysts Contemplate 2021 Demand Recovery

Oil traders eked out another round of modest gains for the commodity on Thursday, their fears about demand somewhat alleviated by Britain and the European Union reaching a post-Brexit trade deal.

However, it wasn't enough to prevent Brent from dropping 2 percent and West Texas Intermediate from shedding 1.6 percent for the week, thanks to concern about a mutated Covid virus in the U.K. that caused many other countries to restrict travel to the embattled island.

Brent on Thursday settled up 9 cents at $51.29 per barrel, while WTI settled up 11 cents to $48.23 per barrel.

Andrew Lipow, president of Lipow Oil Associates, said, "While the Brexit deal is supportive, the impact of COVID is the dominant driver in the oil market, [which] is waiting for the wider distribution of vaccines to get the public back on the road and in the air."

Although there is now assurance the pandemic will end next year, the global economic devastation caused by the government imposed lockdowns continues to be felt: Saudi Arabia reported on Thursday that its oil exports in October fell by 18.9 billion riyals ($5.04 billion), down by 32.7 percent year on year, but were up 3.7 percent from September; the drop was attributed to lower global oil prices.

Also, Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors, worried that "Our forecast is there are more downside risks going forward than upside tailwinds for the energy markets: we have already seen downward revisions for oil demand going into next year and with OPEC wanting to start to add production," demand may weaken further.

But now that the Covid vaccines are in use and the worst year on record for energy is drawing to a close, many others are anticipating demand recovery in coming months, the latest being Suhail Al-Mazrouei, energy minister for the United Arab Emirates, who told media on Thursday that "Recovery will be gradual, and won't happen in a quarter or two."

He also said the UAE isn't concerned about the new mutations of Covid: "I haven't seen any danger from these strains; the global health sector can find a solution to this virus."

Meanwhile, Bloomberg on Thursday noted that "A great global restock is at hand, filling ships, trucks and trains, and also firing oil demand" - a reference to shares of shipping behemoth A.P. Moeller-Maersk A/S surging to the brink of a record as well as BNSF Railway Co. in the U.S. riding a boom that's pushed the number of carloads and containers it hauls up year-on-year in recent weeks.