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Oil prices drop on demand worries, rising supplies -Breaking

by Mike Robinson

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© Reuters. FILEPHOTO: Just after sunset, the chimneys at Total Grandpuits’ oil refinery can be seen to the southeast of Paris (France), March 1, 2021. REUTERS/Christian Hartmann/File Photo

Naveen Thakral

SINGAPORE (Reuters – Oil prices dropped on Tuesday after a rebound in European COVID-19 cases raised worries over the demand. There is also the expectation of an increase in supply. However, some market participants still worry that the United States will release its crude reserves in order to curtail a surge in gasoline prices.

As of 0105 GMT futures were down 9 cents (or 0.1%) to $81.96/barrel, while U.S. West Texas Intermediate oil dropped 10 cents (0.1%) to $80.78/barrel.

Europe is now the center of the COVID-19 pandemic. Some governments are considering reimposing lockdowns. China, however, has been fighting the spread and worst effects of the Delta variant.

“Crude oil declined as President Biden was under increasing pressure to tap U.S. resources to lower rising gasoline prices,” ANZ stated in a statement. New restrictions on European travel also affected Sentiment.

Last week, the Organization of the Petroleum Exporting Countries reduced its fourth-quarter world oil demand forecast by 330,000 barrels/day (bpd), citing high fuel prices as a major obstacle to economic recovery following the COVID-19 pandemic.

There are concerns about a declining demand as supply is expected to increase.

U.S. oil companies added oil and other rigs last week for the third consecutive week. This was aided by an increase of 65% in US prices this year.

Rystad Energy predicts that U.S. shale production will reach its pre-pandemic level of 8.68 Million barrels per hour in December.

Oil prices are under pressure due to a stronger dollar. This makes it expensive for other currency buyers. Investors worried about global economic conditions caused the U.S. Dollar to hit an 16-month high against other currencies.

According to the U.S. Commodity Futures Trading Commission, money managers increased their U.S. options and crude futures net positions during the week ending Nov. 9.

The futures and options positions of the speculator group in New York City and London were increased by 11328 contracts to 353 807 over that period.

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