After the news of a decline in U.S. crude inventories last week, oil ended in dispersed order. U.S. light crude WTI for Nymex’s March futures contracts advanced 0.5 percent to $52.85 a barrel, while March’s North Sea Brent gave up 0.18 percent to $55.81. U.S. crude inventories dropped 9.9 million barrels to 476.7 million barrels for the week ended January 22, although the consensus was for a rise of 1.5 million barrels.
Oil rates are set at about $56 in the middle of the week. There were rumors of loud explosions in Riyadh, the capital of Saudi Arabia, on the eve of one of the reasons for the rise in the price of black gold, only a few days after the kingdom said it had avoided an airstrike on the area. Traditionally, the oil price situation is vulnerable to some tension in the Middle East. At the same time, the physical demand for raw materials is already very shaky, geopolitical uncertainties won’t be able to add a substantial premium to the current price.
At the beginning of January, Saudi Arabia declared a voluntary reduction in the supply of 1 million barrels per day between February and March (655 thousand barrels per day on average for the 1st quarter of 2021). Later, in its monthly analysis, the International Oil Agency cut the market outlook for the 1st quarter of 2021 by 600 thousand barrels per day due to lockdowns. However, during the celebration of the New Year in the region, there are now risks of constraints on the movement of the people in China. The holidays will take effect from 11 to 17 February, but the growth of transport traffic will commence as early as 28 January and continue for the next 40 days.
According to Bloomberg, recent figures indicate that the amount of road traffic in the world was 75 percent lower in the week ended January 22, compared with the same period previous to the holidays in 2020 and 2019. Any hopes are placed on the market for diesel fuel for heating and commercial truck transport in cold weather. According to the new estimates, China’s oil demand in February is predicted to be lower by 100-150,000 barrels a day relative to previous projections.
ON the other end, for the February Futures contract on the Comex, gold fell by 0.30% to $1,844.90 on Wednesday. For the yellow metal, this is the fifth consecutive session of the downturn, the first in at least 8 months.