Oil fell below $53 a barrel on a steadily deteriorating short-term demand outlook and a gain in the dollar that reduced the appeal of commodities priced in the currency. Futures in New York declined 1.1%. President Joe Biden warned of roughly another 100,000 American deaths over the next month, while data showed New York traffic thinned from a month earlier. Some Shanghai residents have been banned from leaving the city, while part of Hong Kong is being locked down, the latest in a series of measures to rein in a resurgence of the virus in China.

Nearest crude timespreads are in bullish backwardation structure

Crude is still trading near the highest level in almost a year as investors pile into commodities. There’s also been a boost to energy use from a frigid winter and investors are hoping for a big dose of stimulus spending from the Biden administration. Saudi Arabia’s unilateral output cuts have eased concerns the market would be over-supplied, helping to reshape the oil futures curve.

“We have short-term demand concerns with enhanced lockdowns taking place globally, such as those in China and Malaysia,” said Suvro Sarkar, an energy analyst at DBS Bank Ltd. in Singapore. But that’s being balanced by hopes for U.S. stimulus, vaccines being rolled out and OPEC+’s supply discipline, meaning Brent should continue to trade near $55 a barrel in the near future, he said.

PRICES
  • West Texas Intermediate for March delivery fell 1.1% to $52.56 a barrel on the New York Mercantile Exchange as of 7:29 a.m. in London after closing down 0.3% on Thursday
    • The March contract is up 0.3% so far this week
  • Brent for March settlement lost 0.9% to $55.59 on the ICE Futures Europe exchange after finishing little changed on Thursday