Oil returns but falls nearly 7% weekly as one-way trade ‘broken by Investing.com

By Barani Krishnan

Investing.com – Crude prices jumped sharply on Friday due to the decline of the previous session, aided by weaker bond yields, the fall of the dollar from its highs and the buying of oil on the valley.

But a loss of nearly 7% during the week has shattered the myth of the indestructible oil boom since October, indicating more downside and higher volatility.

Trading in New York, the benchmark for US crude oil, increased the day’s trading by $ 1.42, or 2.4%, to $ 61.42, which is part of the 7.1% drop repeated on Thursday.

London trading, the global benchmark for crude oil, rose $ 1.25, or 2%, to $ 64.53 on Friday, following the previous session’s 7% drop.

But for the week, WTI fell 6.4% while Brent lost 6.8%.

It was the biggest slump for both benchmarks since the week ended October 23rd.

Over the past five months, crude prices have mostly risen in one direction – after driving on OPEC +’s production cuts, declining crude stocks in developed countries and the promise of economic reopening of COVID-19. From about $ 36 a barrel at the end of October, WTI shot up to nearly $ 68 last week.

What is almost completely overlooked is the anemic demand for aircraft and other transportation fuels, as global travel has been severely curtailed by the pandemic.

Europe’s ongoing battle with new outbreaks of infections, alarmingly slow vaccination rates and new closures has also been taken lightly – until Thursday’s dive.

Although the sell-out in the previous session seemed exaggerated from a perfect storm of negativity – which included a peak of 13% of 1.7% and an approaching 92 – it proved that it could happen again.

“The magic of so-called one-way trading has been shattered,” said John Kilduff, founding partner of Again Capital, a New York energy hedge fund. “There is now a recovery in expectations, and it is possible again under $ 60 WTI if the market comes to itself, without supporting data.”

The rise in oil on Friday was a rise in bond yields and the withdrawal of the dollar from the sessions, along with the administration of the 100 million COVID-19 vaccine by the United States and the approval of European medicine Oxford-AstraZeneca dose regulator that has stopped at least a dozen countries in the bloc from using it due to safety concerns.

But working against this positive was a third wave of infections in Europe and increasing closures in places like Italy.

The upcoming US refinery maintenance season, which could yield crude supplies in the country and the possibility of higher crude production from Libya and a still-sanctioned Iran, could also offset the strong sentiment delivered by OPEC + cuts for months.

Technical charts have also indicated that there is more volatility ahead.

“Further upside for WTI is subject to it reaching $ 63.10,” said Sunil Kumar Dixit of SK Dixit Charting in Kolkata, India. “Failure to do so could lead to a risk of a bottom below the recent $ 58.23.”