Oil price comes off the boil as the pandemic lingers

Brent crude oil prices rocketed by 85% between the end of October and mid-March but have since retreated. Trading above $62 a barrel as of the middle of this week, crude is 10% off its recent highs.  

Brent crude had its worst week since October last week, tumbling by 7%, say Emily Gosden and Tom Howard in The Times. Renewed virus restrictions in Europe are weighing on the short-term demand outlook. The fall shows “how premature” bullish talk of a return to $100 a barrel has been, says Bjornar Tonhaugen of Rystad Energy. Oil prices are still being “artificially” propped up by “Opec’s reduced supply” deal. 

The International Energy Agency recently cut its global crude-oil demand forecast for this year by 2.5 million barrels per day, reports Reuters. There are growing signs of excess supply in physical crude markets, with Nigeria and Angola cutting prices and reporting unsold cargoes. 

That’s partly because they have a new competitor: traders say that Iranian oil exports to China are on the rise, in defiance of US sanctions, report Myles McCormick and David Sheppard in the Financial Times. The price pullback shows that the recent rally had become “overextended”. Still, many analysts think that global oil demand will still rebound sharply over the coming months. Goldman Sachs forecasts Brent crude prices of $80 a barrel come the summer.