WTI Crude Oil Steady as Markets Worry About Further Weakness in Demand

Early on Friday, WTI crude oil is exhibiting signs of mixed trading as the optimism surrounding deeper supply cuts by Saudi Arabia and decline in US crude stockpiles were balanced by escalating concerns about the new strains of the coronavirus and resulting lockdowns hurting demand further. At the time of writing, WTI crude oil is trading at around $52.18 per barrel.

During the previous session, WTI crude oil prices fell by around 1% as restrictions continued even as markets worried about the fallout of the latest round of fresh outbreaks across China. With the Lunar New Year just around the corner, authorities have already begun to urge citizens from restricting their travel – a factor that could weaken the demand for jet fuel considerably during the busiest travel season of the year across the world’s second largest energy consumer.

On a positive note, however, Saudi Arabia is expected to curb crude supply by an additional 1 million bpd during February and March, even as latest reports point to improvement in compliance with supply cuts across OPEC+ countries. Saudi Arabia’s latest supply cuts, which were announced at the latest OPEC+ meeting earlier this month, will reduce oil supply by 8.125 million bpd starting next week.

However, the overall sentiment among oil traders remains cautious as COVID-19 vaccine rollouts stall due to distribution related challenges across Europe and the US. In addition, the discovery of more contagious strains of coronavirus has increased the likelihood of more lockdowns and restrictions, which could further weaken the demand for crude oil.

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Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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