Oil prices flat with 0.04% rise in week ending August 14

US oil inventories show strong signs of a downward trend as demand is gradually recovering

By Sibel Morrow – August 14, 2020

(Anadolu Agency) – Crude oil prices were flat on Friday afternoon as clashing expectations of increasing hopes for a faster recovery in global economies and fear of a second wave in global coronavirus pandemic cancel each other out.

International benchmark Brent crude was trading at $44.91 at 1118 GMT on Friday, posting a 0.04% rise from trade on Monday at 0840 GMT when it traded at $44.89 per barrel.

American benchmark West Texas Intermediate traded at $42.22 at the same time on Friday relative to $41.80 a barrel on Monday.

Oil markets started the week on a positive uptrend after Amin Nasser, Chief Executive of Saudi Aramco, said he expects an oil demand rebound in Asia as the coronavirus lockdowns begin to ease and the economies gradually open up.

The upturn on prices during the week was supported after Russia declared that it had registered the first COVID-19 vaccine in the world, called Sputnik V, though scientists remain doubtful.

Argentina and Mexico followed the suit and announced that they will produce a COVID-19 vaccine for most of the Latin America developed by pharmaceutical giant AstraZeneca with Oxford University.

The prices were also positively affected by hopes that after a worldwide coronavirus pandemic, the world economies would begin to recover sooner than anticipated.

On Thursday, the US Energy Information Administration (EIA) announced the commercial crude oil inventories in the country. A more than expected fall in the stocks provided support for prices as it raised expectations for rising demand for oil in the world’s largest economy.

The IEA posted 4.5 million barrels drop in the commercial crude oil inventories while the market expectation was a decrease of 2.9 million barrels.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) said global oil demand in 2020 is estimated to be 9.09%, 9.06 million bpd, lower than 2019 to average 90.63 million bpd this year.

However, it is expected to increase by 7 million bpd, or 7.72%, next year to average 97.63 million bpd in 2021.

Coronavirus effects

Concerns about the efficacy of the measures against coronavirus’ second wave dampen the outlook for global oil demand.

The number of COVID-19 cases worldwide is now over 21 million, according to the latest data from Johns Hopkins University.

While the US still tops the number of cases with 5.2 million as of Friday morning, Brazil has more than 3.2 million cases, and India follows it with more than 2.5 million cases.

The number of cases rose to 48 in New Zealand, after 102 days of no cases in the country.

Standoff on US stimulus deal

Yet, increasing doubt about a Washington stalemate in negotiations for a recovery package from the fallout from the pandemic has held downward pressure on prices throughout the week.

The standoff on the talks persists as US President Donald Trump and Republicans are offering a package of approximately $1 trillion, but the Democrats’ plan is over $3 trillion.

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