The oil market had not experienced such a stall for 6 months. A barrel of WTI and Brent in the North Sea fell more than 8%, the former falling below $ 60. A collapse in prices that wiped out more than two weeks of earnings. Investors have been worried for several days about the slowdown in vaccination campaigns in some countries. This slowdown calls into question the short-term recovery and its corollary, the rebound in global oil demand.
If the fall accelerated considerably on Thursday, it has actually been five consecutive sessions that oil has lost ground, an unusual situation. The rough had not known such a long slide for a year.
Increase of more than 20% since the beginning of the year
It must be said that the rebound since the crisis of last year has been spectacular. Some observers come to wonder if the increase (more than 20% since the beginning of the year) would not have been a little too fast? In addition to doubts about the pace of vaccination, there was an increase in US stocks and the report from the International Energy Agency (IEA).
AstraZeneca’s Covid-19 vaccine has been suspended by several European Union (EU) countries after reports of possible side effects, such as bleeding disorders and blood clots. France, Germany, Spain and Italy, however, announced Thursday that AstraZeneca vaccinations would resume, the European Medicines Agency (EMA) having deemed the vaccine “safe and effective.” ”
The US Energy Information Agency’s weekly report showed crude inventories were (at 500.8 million barrels) their highest since early December.
Two years before returning to pre-crisis levels
More importantly, in its monthly report, the IEA estimated that after the health shock, world oil demand could take two years to return to pre-crisis levels.
In the short term, some observers are citing a drop in demand, especially from China, but also from American refineries on the Gulf of Mexico coast, which are still struggling to recover from the cold snap of February. Despite the longer-term prospects for recovery, short-term demand remains fragile and the global recovery uneven. Moreover, it is the contracts with the shortest terms that suffer the most. They are trading again – as at the height of the Covid crisis of March 2020 – at a discount to longer-term contracts.
“The time when a barrel of Brent will rise to $ 70 has not yet arrived,” said Michael Lynch, president of Strategic Energy & Economic Research at Bloomberg.