On Wednesday, oil prices increased, taking advantage of the weakening dollar and prospects of a demand rebound in 2021, as well as last week’s announcement of a stronger-than-expected fall in U.S. crude inventories.
For the January futures market on Nymex, the price of U.S. light crude oil WTI rose 0.8 percent to $48.40 a barrel, while North Sea Brent advanced 0.50 percent to $51.34.
However, the price of WTI and Brent have lost more than 20 percent since the beginning of the year, impacted by the decrease in demand caused by the coronavirus crisis. The oil markets endured an especially turbulent 2020, which, last April, also sent oil futures prices plunging into negative territory, a historical first.
With the expectation of a resumption of demand in 2021, due to the Covid-19 vaccines, classes then resumed in May and into the fall. The OPEC+ Alliance of Producers has also contributed to the price recovery by broadening its supply restraint arrangement in order to minimize global imbalances.
The recent weakening of the dollar, which plummeted to a two-and-a-half-year low against the major currencies in the world, has also increased commodity imports, including crude.
In fact, oil gained on Wednesday from the news of a sharp decline in weekly crude inventories in the U.S. Crude inventories declined by 6.1 million barrels for the week ended December 25 (compared to -3.1 million expected) to return to 493.5 million barrels.
When analysts predicted a 400,000-barrel spike, U.S. fuel stocks have fall 1.2 percent. Distilled fuel inventories (oil and heating gas) rose by 3.1 million barrels, much higher than the demand prediction of 600,000 barrels.
Also the greenback is likely to remain under pressure for a while, as analysts think that it will be in the U.S. economy’s favor to hold the dollar’s value down. So if this happens so then it will result in increasing prices of the black gold.