Oil prices fall as dollar strengthens commodities

Ro Jessica Summers and Andres Guerra Luz air 2/28/2021

(Bloomberg) – One biggest fall since November with a stronger dollar and concerns about inflation measuring the best start to the year on record.

New York futures declined 3.2% on Friday, with a rising dollar reducing the attractiveness of commodities at the price of the currency. However, the U.S. crude still posted a near 18% gain this month as global investments tighten and pockets of demand return. Domestic crude production fell in 2020 for the first time in four years, according to the U.S. government.

“Prices are slightly more at risk for the downturn from the recent run we have seen,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC. “In order to continue to move from here, demand has to come back to a great extent. ”

Raw prices have been noticing the biggest gain so far than in any previous year for the same period, partly because OPEC + production loops are helping to reduce stocks global stock. Moreover, the unprecedented cold explosion that has stopped millions of barrels of U.S. production means that oil markets are around 100,000 barrels per day tighter than previously expected, according to JPMorgan Chase & Co. Lack of supply could be exacerbated in the coming months as North Sea areas come under severe maintenance control.

The Organization of Petroleum Exporting Countries and its allies will meet next week to decide on production rates. Although Russia has stated that it wants to reduce production cuts, the country’s oil output fell below the OPEC + target this month, meaning it did not take full advantage of the more generous quota given to him after the OPEC + meeting in January.

“We all know that OPEC’s return to production is strongly on the market,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. Continued declines in global supply will depend on OPEC’s return and whether the sanctions on Iran are lifted. ”

Prices:

  • West Texas Intermediate for delivery in April fell $ 2.03 to settle at $ 61.50 a barrel
  • The U.S. crude benchmark rose 3.8% this week
  • Brent refused for the April settlement, which ends Friday, 75 cents to end the session at $ 66.13 per barrel
  • The contract gained 5.1% this week
  • The more active May contract rejected $ 1.69 to settle at $ 64.42 a barrel

High bond yields on Thursday were the latest sign that the acceleration of inflation could bring back momentum in monetary policy support that helped fuel gains in risky assets during the pandemic. Although global bonds have since settled, a less appropriate monetary policy approach could have a significant impact on commodity marketing markets.

“Crude oil was in a very high range,” with a view to a withdrawal, said Bob Yawger, head of futures division at Mizuho Securities. Moreover, investors are “still worried about higher rip-off rates. ”

Other oil market news:

  • The Biden administration defended its decision to make airstrikes on eastern Syria overnight, saying the sites it hit are linked to Iranian-backed groups believed to have been involved in recent attacks in Iraq.
  • ICE said it plans to continue using the FOB reference for Dated Brent-related contracts that expire after June 2022 that already have an open interest, according to a newsletter.
  • The U.S. Department of State has identified a network of 76 Saudi individuals who may be subject to visa control for their roles in anti-dissent activity abroad, including but not limited to Jamal Khashoggi was killed.

Source