U.S. oil benchmark falls back below $60 a barrel as Texas freeze loosens its grip

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Oil prices push to 1-year high ahead of OPEC+ meetings


Oil futures lost ground Friday, with the U.S. benchmark pulling back below the $60-a-barrel level, on expectations output shut down by winter storms in Texas will soon be restored.

Expectations major oil producers that make up OPEC+ will move as early as next month to loosen production curbs as well as early signs of a thaw in U.S.-Iran relations were also a negative, analysts said.

The softer tone comes as “some inevitable exhaustion and profit-taking hit as the Texas cold snap looks to be receding,” said Stephen Innes, chief global markets strategist at Axi, in a note.

West Texas Intermediate crude for March delivery
CL.1,
-1.64%

CLH21,
-1.64%

fell 95 cents, or 1.6%, to $59.56 a barrel on the New York Mercantile Exchange. April WTI
CLJ21,
-1.55%
,
the most actively traded contract, was off 93 cents, or 1.5%, at $59.60 a barrel.

Apri Brent crude
BRN00,
-1.17%

BRNJ21,
-1.17%
,
the global benchmark, was down 67 cents, or 1%, at $63.26 a barrel on ICE Futures Europe. Based on the most actively traded contracts, WTI was clinging to a 0.2% weekly rise, while Brent was up 1.4% after hitting 13-month highs earlier in the week.

Friday’s losses come after crude reversed gains in the previous session to end lower, despite a larger-than-expected drop in U.S. crude inventories. Analysts said further downside may be in store as the market pulls back from technically overbought conditions.

The unwinding of the relative strength index, a technical indicator, from overbought conditions above 70.0 could take WTI toward the $57 area, said Robert Yawger, director of energy futures at Mizuho Securities, in a note.

That would shake out some of the weaker speculative longs that had jumped into the market on the Texas weather rally, he said, while strong fundamentals would limit downside with President Joe Biden’s stimulus plan working its way through Congress and vaccine rollouts setting the stage for the reopening of the economy.

“I would expect to see consolidation in the $55 to $57 area, before the come-back-kid-economy rallies to a new multi-month wave high versus the nearly two year wave high of $65.65 from Jan. 8, 2020,” Yawger wrote.



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