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Oil Edges Lower at the Open After Ending Ugly Week With a Bounce

Published 03/21/2021, 06:45 PM
Updated 03/21/2021, 07:09 PM
© Reuters.  Oil Edges Lower at the Open After Ending Ugly Week With a Bounce

(Bloomberg) -- Brent oil edged lower as trading started in Asia, struggling to hold on to a bounce at the end of the worst week since October.

Futures in London slipped 0.5% on Monday after jumping 2% on Friday. Despite the gain in the previous session, crude still capped a significant weekly loss amid a combination of factors including a softening physical oil market, U.S. dollar strength and the unwinding of long positions. Concerns about near-term demand and the uneven recovery from the pandemic also continue to linger.

Saudi Arabia, meanwhile, saw another assault on its energy facilities. While the offensive by Iran-backed Houthi rebels on an Aramco (SE:2222) refinery on Friday had no impact on oil supplies, it’s the latest in a series of attacks on the kingdom.

Despite the weekly plunge, there’s confidence in the outlook for demand and stronger prices. Goldman Sachs Group Inc (NYSE:GS). said the plunge was transient and that the rapid rebalancing would continue with virus vaccinations driving higher mobility. The market will be keenly watching the OPEC+ meeting next week for any change to its output policy in May, especially after the slide in oil and comments from the International Energy Agency that supply is plentiful.

See also: Oil Is Still on a Bumpy Path to Recovery Despite Price Swerve

The prompt timespread for Brent is still in a bullish backwardation -- where near-dated prices are more expensive than later-dated ones -- although the gap narrowed over the course of last week. The spread for WTI, however, firmed in contango after flipping into the bearish structure on March 12.

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©2021 Bloomberg L.P.

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