Value of oil markets falls by 20% in year of lockdowns
Crude dips on last trading day after prices rebound on stimulus by governments
Singapore — Global crude oil markets have lost about a fifth of their value in 2020 as strict coronavirus lockdowns paralysed much of the global economy, but prices have rebounded strongly from their lows as governments rolled out stimulus.
On Thursday, the last trading day of 2020, Brent was down 8c, or 0.2%, at $51.55 a barrel, at 7.56am GMT. US West Texas Intermediate (WTI) lost 13c, or 0.3%, to $48.27 a barrel.
“It is kind of year-end quiet but a weaker dollar is helping keep a floor under markets,” said Stephen Innes, chief global market strategist at Axi.
Brent and WTI have more than doubled from decade-lows seen in April, putting past a year which marked the first negative prices for WTI that shocked investors globally.
Asian shares edged up on Thursday and were set to end a tumultuous 2020 at record highs, after growing investor hopes for a global economic recovery caused the dollar to fall further against most major currencies.
The dollar was ending 2020 in a downward spiral with investors wagering a global economic recovery will suck money into riskier assets even as the US has to borrow to fund its swelling twin deficits.
Global commodity markets are poised to end 2020 on a strong note, with recovering demand and widespread stimulus packages buoying prices after a roller-coaster ride caused by the coronavirus.
Rollouts of vaccines to combat the virus and trillions of dollars’ worth of fiscal support are expected to boost investment and spending in 2021. In the short-term, concerns over coronavirus lockdowns are likely to cap gains.
A new variant of the virus in Britain has led to the reimposition of restrictions on movements, hitting near-term oil demand and weighing on prices, while hospital admissions and infections have surged in parts of Europe and Africa.
On the supply front, US energy firms this week added three oil and natural gas rigs to the best quarter for boosting the rig count since the second quarter of 2017, according to data from Baker Hughes.
A January 4 meeting of oil cartel Opec and allies including Russia (Opec+) is set to boost output by 500,000 barrels a day in January.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.