Oil prices fall for fifth day in a row
Oil prices fell for a fifth straight day on Thursday, hit by data revealing a rise in US crude and fuel inventories. Crude prices were also hit by the implications of the ongoing pandemic on the demand outlook. A "surprise" jump in US crude stocks deepens oil losses. In addition, the uncertainty surrounding the AstraZeneca vaccine is a market drag.
The US Energy Information Administration said on Wednesday that the US oil giant's crude stockpiles rose by 2.4 million barrels last week, a day after the American Petroleum Institute's estimate showed a decline of about 1 million barrels.
In addition, government data showed that US crude stocks rose for a fourth straight week after refineries in the south of the country were forced to shut down due to severe weather. "There is more than enough oil to keep the market adequately supplied," the International Energy Agency said, adding that crude inventories still appear ample by historical standards.
The price of Texas Intermediate crude oil (WTI) opened Wednesday down 1.22 per cent at $64.01 a barrel amid concerns about a slowing economic recovery and new data on the sector. At 09:09 local time (14:09 GMT), WTI futures for April delivery were down $0.79 from the previous day's close.
U.S. benchmark crude oil began its fourth session lower against the backdrop of AstraZeneca's vaccine suspensions in several countries due to possible serious side effects.
Investors were reacting to the unexpected reading on crude stockpiles released by the American Petroleum Institute last night, which dropped by almost 1 million barrels last week. Pending official government data, expectations are for an increase of 2.7 million barrels after a sharp rise of 13.8 million barrels the previous week due to the winter storm in Texas. "A drop in stockpiles could limit losses" in the price, said analyst Sophie Griffiths of Oanda, who noted that movements in the value of the dollar following the Federal Reserve meeting will also play a role.
Gasoline and diesel stocks rose against analysts' expectations for a fall. On the demand side, the slowdown in some coronavirus immunisation campaigns and the possibility of further restrictions to control the pandemic have limited expectations of a recovery in fuel consumption. Several European countries have stopped using the AstraZeneca vaccine for COVID-19 due to concerns about possible side effects. Major consumers such as Germany are also experiencing an increase in infections, while Italy plans to impose nationwide blocking measures at Easter, and France will implement even tighter restrictions.
The global leader of McKinsey & Company's Energy and Materials practice, Thomas Vahlenkamp, has estimated that annual investments in the global energy sector will return "to pre-Covid levels by 2025", following the impact of the pandemic in 2020 and 2021. "The recovery of electricity and gas demand will be faster than that of oil, and coal continues its decline," he stressed, adding that electricity demand will double by 2050 and 76% of generation will be renewable, "including hydro generation, with solar photovoltaic leading the way". It should be added that the president of the Naturgy Foundation, Rafael Villaseca, in response to this study, stressed the importance of continuing the debate on the future of the energy sector, at a time when "dependence on globalisation continues to be a key value". "The world of energy is undergoing radical changes and opportunities, among which the energy transition based fundamentally on the fight against climate change stands out," he said.