By Adedapo Adesanya
Oil prices returned to the bearish territory on Friday, just a day after hitting a nine-month high, as demand worries due to new coronavirus-related restrictions overshadowed progress toward vaccination programmes.
After rising for most of the past few weeks, due to hopes of a vaccine-induced boost in economic growth and energy demand, oil prices returned downward as the long term effects of the virus keep outweighing the near term positives.
As at last night, the price of the Brent crude was down by 25 cents or 0.5 per cent to $49.98 per barrel, while the West Texas Intermediate (WTI) went down by 18 cents or 0.38 per cent to $46.57 per barrel.
Promising vaccine trials have helped lift some gloom over record increases in the number of coronavirus infections and deaths around the world.
In the US and Europe, high cases are still being recorded even as the United Kingdom began vaccinations this week while the United States could start as early as the coming weekend, while Canada on Wednesday approved its first vaccine with initial shots due from next week.
In the US, the Food and Drug Administration has authorised the emergency use of Pfizer’s vaccine.
A big jump in US crude stockpiles also served as a reminder that there is still plenty of supply available, but it was overlooked as more bullish news ran through the market.
This means the international benchmark crude gained close to 2 per cent this week while WTI was up less than 1 per cent. That puts both benchmarks for a sixth consecutive week of gains for the first time since June.
The market is also taking decision by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to restore a small amount of output in January with caution as investors will be comfortable with the supply-demand balance and expect a recovery in consumption next year.
The group is due to ease current production cuts by 500,000 barrels per day from January, but with demand still under pressure from the pandemic. Market analysts believe that the market still has a lot to face in the coming months.
Modupe Gbadeyanka