TLTP
\nISLAMABAD
\nOil prices are unlikely to remain bearish for long, as fundamentals in crude markets will adjust in the near future, said analysts.
\nCrude suffered its worst day since April 2020 on Thursday as Brent, the most-widely traded benchmark, fell 7 percent, although it remained about 25 percent higher since the start of this year. Brent recovered some lost ground on Friday, settling up 1.98 per cent at $64.53 per barrel. The US benchmark, West Texas Intermediate, gained 2.37 per cent to close the week at $61.42 per barrel.
\nBoth benchmarks had plummeted amid concerns over inflation and a rise in US crude inventories. Before the dramatic weekly decline, Brent and WTI had doubled in value from their low point in March last year.
\n\u201cMore than likely, now that a culling of the herd has happened, oil\u2019s bullish underlying case will reassert itself, and I do not expect prices to remain down here for very long,\u201d said Jeffrey Halley, Asia Pacific senior market analyst at Oanda.
\nOil\u2019s decline last week has raised questions about the emergence of a new supercycle in commodities. Crude, alongside metals such as copper and gold have rallied in recent months, after widespread vaccination drives in developed economies and massive stimulus measures to support the global economy.
\nHowever, concerns about the safety of the Oxford-AstraZeneca vaccine in Europe, as well as the slow pace of inoculation across the continent amid surging Covid-19 cases, has revived concerns about demand recovery.
\n\u201cThe drop in crude prices this week was in our view not caused by one factor but a combination of them,\u201d said Giovanni Staunovo, commodity strategist at UBS.
\nThe \u201cbuild-up in US crude and oil product inventories\u201d last week and cold weather in southern states of the country both affected prices, as was refinery maintenance in China, the world\u2019s biggest importer of crude, UBS said in a report.
\nDemand from China is expected to recover once the maintenance period is over. However, Europe remains the biggest cause of concern for oil markets, the Swiss bank warned.
\n\u201cOil demand recovery is stalling as governments have extended mobility restrictions,\u201d Staunovo said. \u201cThat said, the faster vaccination pace in the UK and the US is promising; road activity in both countries and flight activity in the US are already improving,\u201d he added.
\nUBS is optimistic about Brent\u2019s recovery, estimating the benchmark will average $75 per barrel in the second half of the year, supported by continued supply restrictions from Opec+.
\nThe group, led by Saudi Arabia and Russia, is keeping a tight lid on output, drawing back 7.2 million barrels per day from the beginning of the year until April. Saudi Arabia is also contributing an outsized cut of 1 million bpd until the end of next month.
\nHowever, the increase in crude inventories last week \u2013 for the fifth week in succession \u2013 also played its part in Thursday\u2019s sudden slump.
\n\u201cConcerns are that Americans have started to pump oil at a level which could unbalance the supply and demand equation for oil,\u201d said Naeem Aslam, chief markets analyst at Avatrade.
\nThursday\u2019s plunge \u201cgot the oil bulls out of the dream of seeing the price of a barrel at $100,\u201d said Ipek Ozkardeskaya, senior analyst at Swissquote. \u201cRight now, we are perhaps at a point in time and at a level in price where the bulls start asking how far they should carry the oil rally,\u201d she added.
\nThe $65 to $68 price range will be a \u201cmake-or-break zone\u201d for the foreseeable future, with the price of oil likely to soar and consolidate within the $75 to $100 spectrum, she said.<\/p>\n","protected":false},"excerpt":{"rendered":"
TLTP ISLAMABAD Oil prices are unlikely to remain bearish for long, as fundamentals in crude markets will adjust in the near future, said analysts. Crude suffered its worst day since April 2020 on Thursday as Brent, the most-widely traded benchmark, fell 7 percent, although it remained about 25 percent higher since the start of this […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-181224","post","type-post","status-publish","format-standard","category-top-news"],"yoast_head":"\n