The oil market, after a 25% rise in prices, switched to correction mode in two months.
On Monday trading without any visible news and amid growing stock indices in the US, oil prices plunged 1.7 dollars, or almost 3% in two hours, and landed at lows for the week.
By 23.05 Moscow time, April Brent futures are traded in London at $ 63.32 per barrel (-1.71%), while similar contracts for WTI in New York cost $ 60.3 (-1.93%).
“The negative (for the market) is that there is more and more talk about demand from China, possibly starting to fizzle out,” said Phil Flynn, an analyst at Price Futures Group. “There is a rumor that their strategic reserves are filled to capacity, and some are starting to bet that the Chinese will no longer be able to drag quotes upward” (quoted by Reuters).
Last week, Bloomberg sources familiar with closed Chinese statistics reported that almost all storage facilities in the PRC were overfilled, and their stocks already cover 120 days of imports against the authorities’ target of 90 days.
The news about the Brazilian strain of coronavirus, which has already spread in 25 countries, adds fuel to the fire and, as researchers from Oxford, Imperial College London and the University of São Paulo have found, is 1.4-2.2 times ahead of the classic covid in infectiousness.
Moreover, the Brazilian virus in 25-61% of cases is resistant to the immunity formed by the usual SARS-CoV-2, which means that it may be out of the reach of mass-produced vaccines, writes FT.
The third wave of the pandemic is gaining momentum in Eastern Europe, and Finland is imposing an emergency regime while OPEC + ministers prepare for their next meeting on March 4 to determine how much oil to pump in the coming months. The positions of the key participants diverge again: Saudi Arabia urges not to rush and maintain restrictions, while Russia is in a hurry to reopen wells and increase supplies.
Exactly a year ago, Moscow and Riyadh, having quarreled at the same ministerial meeting, started a price war that plunged quotations to negative values. But even having drunk the cup of oil grief and smoked the “pipe of peace”, Russia and the Saudis cannot do without drama, making the big speculators nervous, who have more than 800 million barrels of futures and options in their hands.
“There is a lot of speculative money in the oil market right now, and they (OPEC + – Ed.) Should better avoid actions that could provoke the flight of investors,” says Warren Patterson, an analyst at ING commodities markets.