- Oil rally loses steam on new coronavirus infections and the resulting lockdowns (Reuters)
- The recovery in oil demand has stalled in Europe, as several countries impose new forms of lockdowns to mitigate the spread. However, the real shock is coming out of China, where cases are now increasing at their highest rate in six months. Shijiazhuang, the provincial capital and epicenter of the new outbreak, is in lockdown, and all outgoing travel activity has been brought to a halt
- The dollar has also rallied to pressure oil prices further. The dollar index (DXY) has risen by 45 pips to $90.552
- Major OPEC producers raise crude prices on barrels bound for Asian markets (Bloomberg)
- Iraq, Abu Dhabi, and Kuwait all follow suit raising pricing on oil grades headed to Asia after Saudi Arabia announced a similar move last week
- AEGIS notes the market is watching to see how Asian refiners/purchasers react to the increase in crude prices. Buyers may have the option of snapping up cheaper barrels elsewhere, namely the U.S.
- Indian oil demand fell for the first time in over two decades in 2020
- Total petroleum product demand decreased by 10.8%, bringing consumption to a five-year low of 193.4 MM tons
- Still, gasoline consumption saw a 9.3% year-over-year increase in December '20 as demand returned. Indian and Asian demand has been a bright spot in an otherwise gloomy demand picture over the last few months