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Oil closes with the underlying market structure holding

(Bloomberg) – Oil closed lower, but its underlying market structure tightened as investors assessed the challenges for a global economic recovery. West Texas Intermediate crude oil futures were down 0.3% on Thursday after a troubled session. Despite fluctuations in overall prices, the oil futures curve is showing strength. The premium for the nearest global benchmark Brent contract rose to its highest level in a week compared to the following month. The bullish backwardation structure suggests supply tightening. WTI’s so-called fast spread also widened. Nonetheless, signs of a mixed economic recovery weighed on the benchmark’s crude oil price. In the United States, where use is recovering amid widespread vaccine adoption, jobless claims rose unexpectedly, highlighting the troubled road. India, the world’s third largest oil importer, reported a record number of daily Covid-19 cases, and several countries, including the Netherlands, are restricting the use of a Covid-19 vaccine due to possible complications. “The market is waiting to be seen. Which way is this going? “Said Rob Haworth, senior investment strategist at US Bank Wealth Management. “The question is whether demand is really recovering enough to offset the surge in OPEC production.” The US benchmark crude oil futures have been in a tight band around $ 60 a barrel for the past few weeks. While signs of a pickup in demand in countries like the US have boosted sentiment, new Covid-19 outbreaks and renewed lockdowns in other parts of the world have acted as a counterbalance. Despite the recent price drops, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said the country remained confident of gradually increasing production. See also: The Saudi minister is confident that OPEC + has made the decision on the right production in the past few days and weeks have reduced position sizes due to increased market volatility and a stronger US dollar, “said Ryan Fitzmaurice, commodities strategist at the Rabobank. These factors are starting to reverse, which could suggest the liquidation phase for CTAs is nearing the end, he said. With virus cases continuing to flare up, the chances of a simultaneous reopening of the global economy in the northern hemisphere in the summer have decreased, analysts at RBC Capital Markets wrote in a report. However, it is possible that lockdowns could be eased gradually around the world during this period to support the market as autumn approaches. Facts Global Energy raised its estimate for global oil demand growth this year to 6 million barrels a day. 75,000 barrels per day versus previous forecast. However, UK government modeling shows that easing restrictions can lead to more hospital stays and deaths, FGE said. If this were applied to the rest of the world, such a scenario would slow down the recovery in consumption significantly. Meanwhile, developments in discussions between Iran, the US, and other world powers related to the revival of a 2015 nuclear deal add to the complexity of the market supply and demand equation. The Iranian negotiator at the Vienna talks said the sides were focused on lifting U.S. sanctions in a single step, according to a statement that failed to specify what Tehran is offering in return. The US has not yet responded to the comments. More articles like this can be found at Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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