(Bloomberg) -- Oil fell in early Asian trading -- after the first back-to-back weekly decline since October -- amid fresh evidence that a resurgence of the coronavirus is taking a toll on economic growth and energy demand.
Futures in New York fell below $52 a barrel after a Chinese purchasing managers’ index for manufacturing missed estimates for January, showing that efforts to rein in Covid-19 are starting to affect Asia’s largest economy. A top health adviser to President Joe Biden warned Sunday that a new variant of the virus circulating in the U.K. will likely become the dominant strain in the U.S. and may lead to future restrictions on in-person gatherings.
Losses have been kept in check by a disciplined response from producers. OPEC and its partners estimate they implemented 99% of their agreed oil-supply curbs in January, according to a delegate who asked not to be named. Chevron Corp. (NYSE:CVX), meanwhile, said it will wait until it has a firmer read on the trajectory of the pandemic and OPEC+ before resuming its plan to increase shale output.
A rally in oil that got underway at the start of November has stalled over the last couple of weeks as the market digested signs that demand is worsening. But while headline prices have been treading water, the futures curve is pointing to a more balanced market as West Texas Intermediate and Brent move further into backwardation, a bullish structure that signals tightness of supply.
Implementation of the OPEC+ cuts last month was at 103% among members of the Organization of Petroleum Exporting Countries, and 93% for their non-OPEC partners, which includes Russia and Kazakhstan, according to the delegate.
See also: Saudi Arabia’s Oil Fears Look Well Founded: Julian Lee
The group’s Joint Technical Committee will present its assessment to the Joint Ministerial Monitoring Committee, which meets on Wednesday to discuss the alliance’s strategy. The JMMC is unlikely to recommend any policy changes, according to delegates who declined to be identified.
©2021 Bloomberg L.P.