The oil price looks optimistic. What are the reasons?
Crude descends in Asia after strong trading week
On Friday, crude slowed its surge in Asia, following the prospect of high inventories as well as more efficient production.
August delivery US West Texas Intermediate crude futures went down 0.20% demonstrating $45.99 a barrel in New York. Meanwhile, in London, September delivery Brent futures slid 0.14%, trading at $48.35 a barrel.
Friday’s moderate losses in Asia haven’t done much to cap one of the best trading weeks for crude in months. Evidently, oil prices have been suppressed for up to three years, but this week’s reports of diving stocks in America and the probability of extending an OPEC output cap to Libya and Nigeria definitely helped to shore up markets.
On Thursday, Nigeria announced that it would restrict its crude output when it stabilizes at about 1.8 million barrels a day. In May, Nigerian oil output reached 1.733 million bpd, while June’s output is supposed to approach the target.
USD’s rally takes a pause, while riskier assets are modestly rising.
We are now past the middle of January, and this means that the largest US companies will report their earnings for the fourth quarter and many of them will provide the results of the entire 2020.
Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.