“All mid-downstream businesses have returned to profitability,” Descalzi said in a statement.

Oil steady as supply cuts balance slowing fuel demand

LONDON, January 29, 2021 – Oil prices were mixed on Friday as slowing fuel demand was balanced by a pending supply cut by Saudi Arabia and lower US oil stocks.

US West Texas Intermediate (WTI) crude oil futures slipped 3 cents to $52.31 a barrel at 0151 GMT (2051 ET). This comes after a fall of 1.0% on Thursday.

Brent crude futures for March rose 14 cents, or 0.3%, to $55.67 a barrel, after falling 0.5% in the previous session.

The Brent March contract expires on Friday. The more active April contract rose 11 cents, or 0.2%, to $55.21.

The slower fuel demand is attributed to delays in vaccine rollouts in the US and EU, a flood of new cases in Israel despite vaccinating its population and a new strain of coronavirus from South Africa reaching the states.

“Oil investors’ worries … around vaccines availability and rollouts, which could lead to protracted lockdowns in Europe, are likely the two most damaging feedback loop culprits on the continually revolving carousel of adverse risks for the oil market,” said Axi global strategist Stephen Innes. However, the market is propped up by supply cuts. Saudi Arabia is set to cut output by 1 million barrels per day (bpd) in February and March.

The Saudi cut means OPEC+ supply cuts will rise from 7.2 million bpd in January to 8.125 million bpd in February, according to Commonwealth Bank analyst Vivek Dhar.

Output curbs in January by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, also helped.

“The OPEC+ production strategy is still working and hopes are high we will get J&J’s vaccine approved sometime next week,” said OANDA analyst Edward Moya in a note.

Adding to that, a 9.9 million barrel drawdown in US oil inventories last week and forecasts for a small drop in US oil production in February are supporting factors.

First published on Investing.com

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