Market News Oil prices have stabilized since their low in one and a half months, and pandemic concerns still put pressure on oil prices
Oil prices have stabilized since their low in one and a half months, and pandemic concerns still put pressure on oil prices
During the European session on November 22, U.S. crude oil prices temporarily stabilized from a one-and-a-half-month low. U.S. oil rose by $0.4, or 0.5%, on the day. The market expects that oil prices will still be under pressure in the short-term, and it seems that there will not be much relief.
2021-11-22
7898
On Monday (November 22) European time, US crude oil prices temporarily stabilized from a one-and-a-half-month low, and US crude oil rose by $0.4, or 0.5%, in the day. The market expects that oil prices will still be under pressure in the short-term, and it seems that there will not be much relief.
The blockade brought about by the new COVID-19 pandemic has triggered concerns about demand in the crude oil market, and some oil industry players have signaled the restoration of supply.
Although oil prices have fallen, for those consumers who wish to reduce prices when they refuel, it is unlikely that the drop in oil prices will immediately translate into lower gasoline prices. According to data from the American Automobile Association, the current average price of gasoline per gallon in the United States is approximately a seven-year high of US$3.41. This is higher than the US$3.34 a month ago and US$2.12 last year.
After the news of the Austrian blockade last week, worries about a new round of epidemic in Europe continued, which caused oil prices to come under pressure. The rebound in demand has been the main driving force of the oil recovery this year, and any signs that may limit consumption will scare market participants.
In the epidemic, because people do not move around and businesses are closed, the blockade will weaken the demand for petroleum products. If these measures extend from Austria to other parts of Europe or other parts of the world, it may cause the market to fall into an oversupply situation.
Craig Erlam, senior market analyst at Oanda, said: The market is still fundamentally in good condition, but if other countries follow Austria’s approach, the blockade is now clearly a risk. Oil prices falling below US$80 may deepen the correction and may pull the price back to around US$70.
An AAA spokesperson said on Monday: The slight decline in natural gas demand may be due to changes in seasonal driving habits, which helps to ease oil prices. The continued tight supply of crude oil may lead to fluctuations in natural gas prices. "
The Biden administration has repeatedly stated that it is exploring ways to reduce the burden of rising oil prices on consumers in the form of natural gas prices, which are hovering near a seven-year high. One option is for the government to use strategic oil reserves.
Louis Dickson, senior oil market analyst at Resta Energy, said, “If the President of the United States wants the attention of the oil market, it has now gotten, because all eyes are on Washington to see if it will pass subsequent coordinated efforts. Put further downward pressure on oil prices to increase the bet on the release of strategic crude oil reserves. Since the summer, the United States has been openly discussing the oil market, especially for OPEC+. The government hopes that OPEC+ will increase production to ease supply and reduce prices. For the release of strategic crude oil reserves. , Other importing countries such as China, India and Japan may also join."
However, analysts pointed out that the release of oil from the Strategic Crude Oil Reserve SPR may not have much long-term impact. UBS stated in a report to customers on November 5: Although such a decision will cause prices to fall, SPR can only fill the gap during temporary production interruptions and cannot solve the structural problems of insufficient investment and rising demand.
In addition to political resistance, as producers including the United States begin production, oil is also under pressure to increase supply.
Oil prices have steadily climbed throughout 2021, and US crude oil hit a seven-year high of $85.41 on October 25. It has since fallen by 11.5%. Despite the recent weakness, U.S. oil will still rise 55% in 2021.
GMT+8 16:49, U.S. crude oil price was quoted at US$76.59/barrel
The blockade brought about by the new COVID-19 pandemic has triggered concerns about demand in the crude oil market, and some oil industry players have signaled the restoration of supply.
Although oil prices have fallen, for those consumers who wish to reduce prices when they refuel, it is unlikely that the drop in oil prices will immediately translate into lower gasoline prices. According to data from the American Automobile Association, the current average price of gasoline per gallon in the United States is approximately a seven-year high of US$3.41. This is higher than the US$3.34 a month ago and US$2.12 last year.
After the news of the Austrian blockade last week, worries about a new round of epidemic in Europe continued, which caused oil prices to come under pressure. The rebound in demand has been the main driving force of the oil recovery this year, and any signs that may limit consumption will scare market participants.
In the epidemic, because people do not move around and businesses are closed, the blockade will weaken the demand for petroleum products. If these measures extend from Austria to other parts of Europe or other parts of the world, it may cause the market to fall into an oversupply situation.
Craig Erlam, senior market analyst at Oanda, said: The market is still fundamentally in good condition, but if other countries follow Austria’s approach, the blockade is now clearly a risk. Oil prices falling below US$80 may deepen the correction and may pull the price back to around US$70.
An AAA spokesperson said on Monday: The slight decline in natural gas demand may be due to changes in seasonal driving habits, which helps to ease oil prices. The continued tight supply of crude oil may lead to fluctuations in natural gas prices. "
The Biden administration has repeatedly stated that it is exploring ways to reduce the burden of rising oil prices on consumers in the form of natural gas prices, which are hovering near a seven-year high. One option is for the government to use strategic oil reserves.
Louis Dickson, senior oil market analyst at Resta Energy, said, “If the President of the United States wants the attention of the oil market, it has now gotten, because all eyes are on Washington to see if it will pass subsequent coordinated efforts. Put further downward pressure on oil prices to increase the bet on the release of strategic crude oil reserves. Since the summer, the United States has been openly discussing the oil market, especially for OPEC+. The government hopes that OPEC+ will increase production to ease supply and reduce prices. For the release of strategic crude oil reserves. , Other importing countries such as China, India and Japan may also join."
However, analysts pointed out that the release of oil from the Strategic Crude Oil Reserve SPR may not have much long-term impact. UBS stated in a report to customers on November 5: Although such a decision will cause prices to fall, SPR can only fill the gap during temporary production interruptions and cannot solve the structural problems of insufficient investment and rising demand.
In addition to political resistance, as producers including the United States begin production, oil is also under pressure to increase supply.
Oil prices have steadily climbed throughout 2021, and US crude oil hit a seven-year high of $85.41 on October 25. It has since fallen by 11.5%. Despite the recent weakness, U.S. oil will still rise 55% in 2021.
GMT+8 16:49, U.S. crude oil price was quoted at US$76.59/barrel
Bonus rebate to help investors grow in the trading world!
Or try Free Demo Trading