© Reuters. Oil Holds Losses After Slipping from 7-Year High on Growth Fears
(Bloomberg) — Oil held losses after falling from a seven-year high on the back of a coronavirus resurgence and bearish technical indicators.
Futures in New York traded near $82 a barrel early in the Asian session after sliding more than 1% on Thursday. Lockdowns have returned in parts of Eastern Europe following a flare up in Covid-19 cases, while Russia earlier this week ordered the most sweeping virus restrictions since May. Oil’s 14-day Relative Strength Index was also signaling that a price correction was overdue.
Oil rallied to the highest level since 2014 this week as a global energy crunch coincided with a broader economic recovery from the pandemic. The crisis has led to crude stockpiles at the key U.S. storage of Cushing rapidly draining to near critically low levels, while Saudi Arabia said any extra oil from OPEC+ would do little to bring down surging natural gas prices.
The structure of the U.S. crude market has firmed in a bullish pattern. The closely-watched spread between the nearest December contracts for WTI has blown out above $10 a barrel to the widest since 2013.
See also: Oil Curve Points to a Price and It’s Not $83-a-Barrel WTI
Shortages of natural gas has prompted greater greater demand for crude, but surging gas prices are also threatening to eat up the profit some oil refiners are making on fuels, forcing them to cut processing rates. Gas — specifically methane — is central to making the hydrogen that oil refineries rely on for diesel-producing machines, which help to eliminate sulfur.
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