Oil prices extended their resurgence on the back of vaccine-driven demand hopes, offsetting any immediate lockdown concerns. WTI pushed back above $41, but it's tough-sledding from here...
“Price gains from here get tougher,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “Shutdowns in Europe are going to limit activity for the next month. There’s only so much you can do when you got a spot market that remains awash in oil.”
The market, for now, remains blinded to the continued return of Libyan supply which remains a complicating factor for the OPEC+ alliance’s plan to taper output cuts in January.
Crude -5.1mm (-3.0mm exp)
Gasoline -3.3mm (-600k exp)
Distillates -5.6mm (-2.0mm exp)
After last week's big surprise draw, analysts expect another drop in crude stocks as storm impacts continue to inject noise into any supply-demand signal. In fact not only was crude's draw bigger than expected but the entire complex saw stocks drop...
WTI hovered around $41.40 ahead of the API data and popped higher on the bigger than expected draw...
But it's not all ponies and unicorns...
“The announcement of a vaccine will impact asset price through sentiment, but there will be a considerable lag before we have positive and tangible effects on the economy,” said Harry Tchilinguirian, oil strategist at BNP Paribas SA.
“As oil demand is still on the mend, OPEC+ will need to address the return of Libyan oil barrels and the reinstatement of supply which affects the pace of the re-balancing of the market.”
And this ramp was helped by a massive short-squeeze.