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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Headed For Biggest Weekly Drop Since March

Following three days of losses, oil prices rebounded early on Friday amid fuel demand recovery in the U.S. and Europe, but they were still set for a weekly drop of around 4 percent, which would be the steepest weekly decline since March.

As of 9:57 a.m. EDT on Friday, WTI Crude was trading up by 2.49 percent at $63.48 and Brent Crude was up 1.92 percent at $66.45, as the U.S. dollar dropped and the market welcomed encouraging data about travel and road traffic in Europe and the U.S.

Despite the early Friday rise, oil prices were still poised for a weekly loss as the possibility of an imminent return of Iranian oil hit market sentiment for most of the week. A decline in all commodities this week and concerns about inflation have also weighed on oil prices in recent days.

Global powers taking part in the indirect U.S.-Iranian talks on a return to the nuclear agreement have accepted that the U.S. sanctions on Iran, including on its oil exports, will be removed, Iranian President Hassan Rouhani was quoted as saying on Thursday.

But the latest round of talks ended on Thursday without a major announcement, and negotiators are returning for discussions next week.

“While any announcement confirming the lifting of sanctions would likely hit sentiment further, we believe that this will be short-lived, given that the supply and demand balance remains supportive,” ING strategists Warren Patterson and Wenyu Yao said on Friday. 

“Oil has also been caught up in a broader commodities correction after China warned that it could introduce measures to cool spiking prices of raw materials. Brent’s prompt spread has weakened to show the lowest backwardation this year, an indication market tightness is easing,” Saxo Bank said early on Friday.

“With Iran potentially coming back and OPEC+ already adding barrels, Brent is likely to remain stuck in a $65 to $70 range, with the s/t risk skewed to the downside until the demand picture improves,” the bank’s strategy team said.  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on May 22 2021 said:
    On the contrary crude oil prices are in an upward trajectory underpinned by a global economy returning to normalcy, virtual disappearance of the glut in the market, insatiable oil demand by China and brilliant stabilizing of the global oil market by OPEC+.

    And while some analysts consider a lifting of US sanctions on Iran as bearish, I totally disagree for two important reasons. The first is that we may never see a lifting of US sanctions on Iran even by 2023 or ever. The reason is that the positions of the United States and Iran are irreconcilable.

    The second reason is that even in the unthinkable possibility that sanctions were lifted, Iran could only bring 650,000 additional barrels a day (b/d) to the market. The reason is that Iran has been managing with help from China to export 1.5 million barrels a day (mbd) or 71% of its pre-sanction exports of 2.125 mbd. A global economy expected to grow this year by 6.3% as projected by the IMF could easily absorb the 650,000 extra Iranian barrels without any impact on oil prices.

    In view of the above, I am projecting that Brent crude will hit $70-$80 a barrel in the third quarter of this year and average $65-$67 for the year with global oil demand returning to pre-pandemic level of 101.0 mbd by the middle of this year.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • George Doolittle on May 22 2021 said:
    Only ahem "excess oil" ahem available for physical delivery is that which comes from the United States for anyone on the entire Planet Earth.

    "Very few physical US Dollars to buy that with at the moment" would be an understatement.

    Great news for LPG and LNG.

    Long $kmi Kinder Morgan Energy
    Strong buy

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