Oil continues to fall as the Fed considers a gradual reduction, OPEC + opens the taps | Coronavirus pandemic news

The oil rally in the first half of the year has lost momentum since July amid the threat to demand posed by the spread of the highly contagious delta variant of the coronavirus.

Oil fell for the sixth day in a row to its lowest level since May, after the US Federal Reserve signaled on Wednesday that it was going to start reducing asset purchases in a few months.

West Texas Intermediate futures ended the session down 2.7%, falling below $ 64 a barrel amid a commodity sell-off as the prospect of reduced stimulus shook markets.

The delta virus variant for air travel is depressing demand, and enthusiasm for air travel is waning in both the US and Japan.

The physical market in Asia is softening with moderate purchases from China and India’s decision to sell oil from its strategic reserves.

“The dollar is experiencing considerable strength as the Fed moves to cool the economy,” said John Kilduff, partner at Again Capital LLC. “Oil was already experiencing downward pressure as the market faltered due to declining demand from China, and declining commodity attractiveness is further fueling the decline.”

The oil rally in the first half of the year has lost momentum since July amid the threat to demand posed by the spread of the delta variant.

At the same time, OPEC + went ahead with the gradual restoration of supplies. The combination of factors has led leading analysts to lower their price forecasts for the last half of the year.

To cushion the US economy from the blow inflicted by the pandemic, the Fed has been buying $ 120 billion in assets each month, boosting raw materials.

Minutes from the bank’s July meeting showed a possible setback in its monthly bond purchases, as most participants now judged that it might be appropriate to start slowing down the stimulus.

“Concerns about economic growth, the stronger dollar and a risk-free environment are not helping oil,” said Giovanni Staunovo, an analyst at UBS Group AG. ‚ÄúDemand will continue to recover unevenly over the next few weeks and the oil market continues to be insufficiently supplied. So that should still support prices going forward. “


  • WTI for September delivery fell $ 1.77 to settle at $ 63.69 a barrel in New York. It fell as much as 4.3% earlier.
  • Brent for the October sale fell 1.78 dollars to end the session at 66.45 dollars a barrel.
  • Road traffic remains depressed in several Southeast Asian countries as various levels of blockage still exist.

“Consumption indicators from the region have global influence,” said Stewart Glickman, energy capital analyst at CFRA Research. “Where China goes, investors follow.”

Related coverage:

  • Asia’s physical crude market softened this week as moderate purchases from China coincided with a surprise move by India to sell oil from its strategic reserves to state refineries.
  • Just a week after the White House called on OPEC + to increase oil production faster, the group could be considering a very different route.
  • Saudi Arabia is likely considering a pause in the next scheduled OPEC + supply increase, according to Energy Aspects.


Leave a Comment