Oil Attempts To Settle Above The $53 Level

Oil Video 19.01.21.

IEA Cuts First-Quarter Oil Demand Outlook By 0.6 Million Barrels Per Day

IEA has recently released its monthly Oil Market Report and cut its oil demand outlook for the first quarter and full year. IEA expects that world oil demand will be 0.6 million barrels per day (bpd) lower in the first quarter of 2021 due to coronavirus-related restrictions in Europe.

For the full year, IEA reduced its previous demand forecast by 0.3 million bpd. Currently, it expects that global oil demand will manage to grow by 5.5 million bpd in 2021 after a decline of 8.8 million bpd in 2020.

At this point, it looks like oil traders are ready to ignore downside revisions of oil demand forecasts as they expect that Saudi Arabia’s additional production cut will offset the negative impact of lockdowns in Europe.

According to recent reports, Germany will extend the current lockdown until February 14, 2021 as the country tries to stop the spread of the virus. Most likely, the market has already priced in the extension of all European lockdowns and may be even ready for additional bad news. The recent trading sessions have highlighted the bullish mood of oil traders as oil managed to quickly recover from the sell-off which happened at the end of the previous week.

Oil May Get A Boost From Yellen’s Comments

Today, U.S. Treasury Secretary nominee Janet Yellen stated that the value of currencies should be determined by markets and that expanding jobless benefits would provide a boost the economy.

Well-known for her dovish views, Janet Yellen supports the huge $1.9 trillion stimulus package which has been recently unveiled by President-elect Joe Biden. The additional stimulus may boost the domestic demand for oil and push crude inventories to lower levels.

In addition, the future dovish policy of the former Fed Chair may put additional pressure on the U.S. dollar which started the year on a strong note but continues to trade not far from multi-month lows against a broad basket of currencies. Weak dollar is bullish for dollar-denominated commodities, including oil. If the U.S. dollar moves lower, oil may find additional support.

For a look at all of today’s economic events, check out our economic calendar.