- WTI is trading with losses of around $1.0 on Friday, though has found decent support at $80.00.
- That marks a near $5.0 reversal from earlier weekly highs close to $85.00.
Crude oil prices are set to end the week at lows following significant choppiness over the past few sessions. Front-month futures contracts for the American benchmark for sweet light crude oil, West Texas Intermediary of WTI, are down about $1.0 (over 1.0%) on the day, though have for now remained supported to the north of the $80.00 level. That marks a near $5.0 reversal from earlier weekly highs close to $85.00. On the week, WTI is set to close lower by about 0.75%. Much of the downside took place on Wednesday after the hotter than expected US Consumer Price Inflation report triggered speculation that 1) the Fed would start hiking interest rates early, thus weighing on US growth in 2022 and beyond and 2) that the Biden administration might release crude oil reserves in order to (attempt to) lower energy prices and thus ease inflationary pressures being felt across the US economy.
Some market commentators cited a downgrade by OPEC+ to their 2021 oil demand growth forecast on Thursday as another bearish factor for the oil complex. Crude oil-specific newsflow since Thursday has been relatively light and so crude oil market focus has centered around demand-side dynamics. Here there are conflicting themes; there has been a lot of chatter about how an easing of international travel restrictions sets the stage for a strong rebound in jet fuel demand, which was pretty much the final component holding total global crude oil demand back from hitting pre-pandemic levels. But there has also been a building of Covid-19 concerns in Europe; lockdowns have now been announced in Austria (just for the unvaccinated) and the Netherlands and Germany, where infections rates are at record highs, looks to be next. In the US, infection rates have plateaued since the start of October and are likely to follow Europe as the winter months approach.
Danske Bank “expect many countries will re-introduce (or tighten) some of the soft measures such as face mask requirements and COVID-19 green pass” in the coming months and while the bank does “expect a weaker relationship between new cases and hospitalisations/deaths, especially in countries with high vaccine uptakes”, they warn that “if the waves get bigger than last year (due to a combination of fewer restrictions and a more transmissible variant), hospitalisations may still increase to the same levels as last year”. Even in the absence of harsh lockdown restrictions, higher Covid-19 public fear is a downside risk to developed market growth in Q4 2021/Q1 2022.
This article was originally published by Fxstreet.com.Read the original article here.
