Weekly Oil Report: 2021, the Year of Uncertainties and Doubts

oil-13Dec
December 13, 2021
2 minutes

Crude got the chance to gain around 9% last week after news about the low risks of Omicron. Brent closed at $74.96 and WTI closed at $71.94 on Friday, 13 December. The current zone of crude seems to be dominating for the last days of 2021.

Financial Market participants expected stronger economic reports during last week. CPI, the consumer price index, could comply with the forecast; however, it was way lower than traders’ expectations. Consequently, the dollar sentiment became relatively negative, and oil went for higher prices.

The Federal Reserve statements also show that the tapering policies are coming stronger than before, yet the negative sentiment is ignoring the fact.

VIX, a real-time market index illustrating the market’s expectations over the coming 30 days, is currently at a low level of about 18. The number indicates that fear or stress is low for making any decision. But the condition might not be permanent as the situation is unclear with outbreak and tapering.

JP Morgan has predicted higher demand for oil in 2022 along with $125 per barrel for crude in the next year. The financial institution believes that the Pandemic is almost over, and the world is gradually experiencing an endemic.

However, we shall remember that the threat of a new variant of Covid is not utterly over, and economies are still in danger of new risks. The virus is still mutating.

Petrochemicals were rising along with oil last week. Traders and constructors are in a price limbo. They cannot decide whether to wait or buy instantly. We recommend that traders hold on to spot purchases and avoid severely low prices at the moment. Try to find trustworthy suppliers to minimize the risks such as shipping barriers and low-quality cargoes.

 

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