WTI notches fresh 13-month high, Brent retreats
Europe mobility hits prelockdown levels
RBOB cracks edge higher
New York —
Crude oil futures settled mixed as the market searched for fresh drivers despite increasingly bullish demand outlooks.
The continued strength of oil prices is predicated in large part on expectations of a robust recovery in demand later this year as global vaccination programs gain traction against the coronavirus pandemic. But the recent rally, which has seen crude climb nearly 80% from a late October nadir, may be losing steam, analysts said.
“Thanks to COVID vaccine success, it seems the reopening of the global economy will happen a lot sooner and everyone is rushing to upgrade their crude demand outlooks,” OANDA senior market analyst Edward Moya said in a note. “The best-case scenario is unfolding for the global oil demand recovery, but the crude price rally is reaching exhaustion, which should mean WTI crude should struggle to break the $65 level this week.”
NYMEX March RBOB settled down 33 points at $1.8923/gal, and March ULSD edged down 17 points to $1.9066/gal.
Oil prices were also backstopped by a weaker US dollar. The ICE Dollar Index fell to 90.125 in afternoon trading, down from a Feb. 24 close of 90.17.
Platts Analytics noted in a Feb. 24 report that based on Johns Hopkins University’s data, the global number of newly confirmed coronavirus cases averaged 365,100/day in the most recent week, down from 382,200/day a week ago and 436,500/day two weeks ago.
“The recent pace was considerably slower compared to January, when new cases averaged 635,600/day and December with daily average of 649,000. It is probably safe to say that the spread of the coronavirus on a global scale is now past its peak,” Hans Kunnen, senior economist at St. George Bank said in a Feb. 25 note.
As the most recent pandemic wave recedes, governments are easing demand-destroying lockdowns.
Economic mobility in Europe’s five biggest economies — France, Germany, Italy, Spain and the UK — edged up in the week to Feb. 20, and was hovering at 37.7% below precrisis levels, according to Google data. Overall, the data showed European mobility levels have recovered to levels last seen on Dec. 24, when a wave of new regional lockdowns began to come into effect.
“This year is likely to see the biggest ever jump in oil demand as the vaccination effect will amplify the natural COVID curve flattening data from lockdowns,” chief global market strategist at Axi, Stephen Innes, said in a note.
The front-month ICE New York Harbor RBOB crack versus Brent edged up 5 cents from its Feb. 24 close to $16.07/b in afternoon trading, up more than $2/b from year-ago levels.
Chris van Moessner
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