Oil Price Fundamental Daily Forecast – Surging COVID Cases Raising Doubts About How Long Demand Would Hold UpCrude oil prices are being partly underpinned by the news that China’s refineries posted record throughput in 2020.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Tuesday as traders return from Monday’s U.S. bank holiday. The early tone is being set by bullish traders hoping that government fiscal stimulus will bolster global economic growth and demand enough to offset renewed coronavirus pandemic lockdowns that could dampen fuel consumption.
At 08:09 GMT, March WTI crude oil futures are trading $52.64, up $0.22 or +0.42% and March Brent crude oil is at $55.28, up $0.18 or +0.33%.
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The changes are based on Friday’s close since there was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday.
China’s 2020 Refinery Output Rises 3% to Record; Gas Output Up Nearly 10%
Crude oil prices are being partly underpinned by the news that China’s refineries posted record throughput in 2020, processing 3% more crude oil than a year ago, as they took advantage of low prices and healthy margins on a quick rebound in domestic fuel demand from the coronavirus pandemic.
Annual throughput stood at 674.41 million tonnes in 2020, or about 13.45 million barrels per day, up roughly 410,000 bpd from 2019, data from the National Bureau of Statistics showed.
December output rose 2.1% on the year to a monthly record at 60 million tonnes, or about 14.13 million bpd, a touch below the daily record set in November, which has one less day, at 14.2 million bpd.
Main Support Coming from Saudi Arabia’s Voluntary Supply Cuts
WTI and Brent crude oil have been primarily supported since the new year began by Saudi Arabia’s additional supply cuts in February and March which are expected to draw down global inventories by 1.1 million barrels per day in the first quarter.
Traders could sit on their hands the next two sessions as they await U.S. President-elect Joe Biden’s inauguration speech on Wednesday evening (local time). Bullish traders will be looking for more detail on his $1.9 trillion aid package, proposed last Thursday.
Concerns about rising COVID-19 cases globally and renewed lockdowns weighing down fuel demand are expected to keep a lid on oil prices until another vaccine becomes available and/or the number of new COVID-19 cases start to retreat significantly.
ANZ analysts flagged concerns about falling fuel sales in India in January from December and rising COVID-19 cases in China and Japan that could dampen oil demand.
“In Europe and the U.S., the slow rollout of vaccines is also raising concerns that a rebound in demand will remain elusive,” the bank said.