Oil Slips From Nine-Month High Amid Tighter Virus Restrictions

Oil traded near a nine-month high as the IEA cautioned that a market glut will last another year. Futures had earlier fallen on concerns that more pandemic lockdowns could slow a global rebound in fuel demand. New York is heading toward a second full lockdown after a surge in infections, with London being placed under England’s toughest coronavirus rules from Wednesday.

The International Energy Agency trimmed its demand forecast for next year, and doesn’t expect the crude glut built up during the pandemic to clear until December 2021. That was enough to counter positive data from China, which processed a record amount of crude on a daily basis last month as fuel consumption recovered.

Oil eases on indications of more pandemic lockdowns

Optimism that fuel consumption will rebound following the roll-out of vaccines has helped to drive oil about 30% higher since the end of October. The near term outlook, however, is looking tougher, with OPEC also cutting its projections for demand in the first quarter of 2021 as the group and its allies prepare to start returning some crude supply to the market from January.

“Fundamentals point to a setback, considering new mobility restrictions,” said Giovanni Staunovo, commodity analyst at UBS Group AG. “On the other hand, long-term oriented investors look still to rotate into cyclical commodities such as oil.”

PRICES
West Texas Intermediate for January delivery lost 10 cents to $47.09 a barrel on the New York Mercantile Exchange at 10:12 a.m. London time after rising 0.9% on Monday. Futures closed at the highest since March 3. Brent for February settlement fell 0.1% to $50.36 on the ICE Futures Europe exchange after gaining 0.6% on Monday.

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