Brent oil was steady as investors assessed the near-term demand outlook after ending the worst week since October with a bounce, Bloomberg reports. Futures in London traded near $64 a barrel after losing more than 1% earlier as a rising dollar reduced the appeal of commodities priced in the U.S. currency.
Demand is showing some signs of weakness with the number of unsold April-loading oil cargoes from West Africa swelling, while Germany is proposing an extension to lockdown restrictions. Despite posting a 2% gain on Friday, crude suffered a heavy weekly loss following a bearish start to last week.
Saudi Arabia, meanwhile, saw another assault on its energy facilities. While the offensive by Iran-backed Houthi rebels on an Aramco 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 long-term outlook and a return to higher prices. Goldman Sachs Group Inc. said the recent sell-off was transient and that the rebalancing would continue with 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. “Oil could continue swinging between red and green, being torn between demand fears and the die-hard optimists,” said Vandana Hari, founder of Vanda Insights in Singapore. Prices are “likely to hover around current levels, at least until OPEC+’s next move,” she added.
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 was at 14 cents a barrel on Monday, compared with 67 cents at the start of the month.
Iran’s Supreme Leader Ayatollah Ali Khamenei, meanwhile, said his country was in no hurry to revive the nuclear deal, although he reiterated that Tehran was still prepared to return to the original terms of the agreement once the U.S. has lifted sanctions. Despite the penalties, Iranian crude exports appear to be rising, with China boosting its purchases recently.
