Oil Market To Remain Tight Until The World Starts To Live With Covid

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  • ICE March Brent futures contract was up 31 cents/b (0.38%) from the previous close 
  • Libyan oil output meanwhile is poised to recover to about 1.2 million b/d 
  • oil prices will likely trade range bound until more clarity

Covid had an effect on crude oil and its prices, benchmark, supply and demand chain. There has been a dip in the crude oil benchmark overnight, reports SP Global.  

Crude oil futures

Crude oil futures were higher in mid-morning trade in Asia Jan. 11, paring overnight losses as the supply-demand situation remained supportive even though rising COVID-19 cases worldwide continued to present a near-term risk.

Both crude oil benchmarks had dipped by up to 1.1% overnight, shedding some gains accrued over the last three weeks, as reports of an impending return in Libyan supply and climbing COVID-19 cases worldwide weighed on prices.

Supply-demand and covid-19

Nonetheless, analysts said the overall supply-demand balance remained supportive, with inventory levels still tight and global demand set to recover further even as many countries battle a surge in COVID-19 cases driven by the highly contagious omicron variant.

COVID-19 cases in China continued to be a point of concern. The country reported 97 locally transmitted cases as of Jan. 9, according to the National Health commission, up 5 from the day before.

OANDA’s Moya said oil prices will likely trade range bound until more clarity on the outcome of China’s approach to tackling its latest COVID-19 outbreak emerges.

Recovery of Libyan oil output

Libyan oil output meanwhile is poised to recover to about 1.2 million b/d after state-owned National Oil Corp reached an agreement with the Petroleum Facilities Guards, paving the reopening of the oil fields of Sharara, El Feel, Wafa and Hamada and the 300,000 b/d Zawiya oil terminal, Libya-based and trading sources said Jan. 10.

This comes after Tengizchevroil, the operator of Kazakhstan’s Tengiz oil field, said Jan. 9 production at the field was returning to normal after disruptions caused by protests at the site.

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Source: SP Global

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