Oil slid from its peak levels in seven months on Thursday, with intimations of larger production contributing to end a rebound fuelled by the hope that COVID-19 vaccines will rejuvenate demand.
Brent futures had spiked to around $50 per barrel this week following vaccine advancement announcements by three prominent pharmaceutical firms, pointing to the potential of rolling out the remedies by the end of this year.
Benchmark Brent climbed down further by 75 cents to $47.86 per barrel at 10:18 West Africa Time, having shed $1 in early trading. It added nearly 1.6% on Wednesday.
West Texas Intermediate (WTI) crude declined by 72 cents to $44.99, following an appreciation of 1.8% at the session before.
Avtar Sandu, senior commodities manager at Phillip Futures, said “despite a number of strong fundamentals rallying the markets, especially vaccine development supporting oil, bearish concerns remains.”
An uptick in rigs used in the U.S., lockdowns introduced in the course of the pandemic and additional supply from Libya, raised the threat of keeping bulls at bay, Sandu added.
Oil inventories in the United States dived by 754,000 barrels last week, according to statistics, contrary to Reuters analysts forecast of a 127,000 barrels leap.
At Cushing, Oklahoma – the delivery point for WTI, stockpiles crumbled by 1.7 million barrels.
Gasoline needs for the week shrank by 128,000 barrels per day (bpd) to 8.13 million bpd, marking the weakest point since June.
Joe Biden, the U.S. president-elect has encouraged the country’s citizens and residents to avoid large family gatherings, wear protective masks and observe physical distancing during the Thanksgiving holiday.
Yet, Americans are ignoring urging from officials to stay at home.
The country has reported over the past two weeks 2.3 million new coronavirus cases.
Traders are looking to a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) next week, which could offer strength or at least maintain the current output level.
OPEC and Russia-led allies, a cartel often called OPEC+, are inclined to suspend an increase in production proposed for next year in order enable the market absorb the new wave of COVID-19 and enlarging Libyan supplies, said three OPEC sources.
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