Updates
March 19, 2021: see comments --
- https://www.barchart.com/futures/quotes/CLJ21/price-history/historical; April, 2021: $61.32.
- https://www.barchart.com/futures/quotes/CLK21/price-history/historical; May, 2021: $61.37.
- https://www.barchart.com/futures/quotes/CLR21/price-history/historical; Oct, 2021: $59.49.
- https://www.barchart.com/futures/quotes/CLJ23/price-history/historical; April, 2023: $52.32.
Original Post
Crude oil futures plunged more than 5% in their biggest intraday loss since December, 2020, with some analysts citing concerns over rising tensions between the U.S. and Russia.
April WTI crude fell 5.8% to $60.85/bbl and May Brent fell 5.5% to $64.23/bbl, both hitting at least two-week lows.
The fifth day of declines for both contracts also marks the longest losing streak for WTI since February 2020 and for Brent since September 2020.
"U.S.-Russia tensions are increasing, with the U.S. threatening sanctions on Russia," ... one way Russia could retaliate is to target shale producers by flooding the market with oil.
President Biden earlier this week essentially called Russian President Putin "a killer," prompting Russia to recall its ambassador to the U.S. for consultations.
Analysts say Europe's sluggish vaccine rollout also remains a weight on crude, raising questions about the speed of the recovery in demand.
"Even if the AstraZeneca vaccine recovers public confidence, this will likely not be the last inoculation issue to arise as countries race to vaccinate as many people as possible all while new mutations are constantly being discovered," says Rystad Energy analyst Louise Dickson.
Also, U.S. government data continues to show rising crude inventories after last month's Texas freeze forced shutdowns at refineries, and traders say stockpiles could grow further since WTI recently switched from backwardation to contango, where front-month oil is cheaper than the second-month.
"Contango is bearish because it encourages [firms to] store crude oil and sell it further down the curve at a profit," Mizuho's Bob Yawger says.
And the latest report from the International Energy Agency said pre-pandemic global oil demand is unlikely to return for at least another two years.
Bad, bad news for Saudi Arabia.
By the way, if you like predictions from agencies like the IEA, you will enjoy this from the Canadian Geological Survey in 2006.
This is what should be concerning to fossil fuel energy bulls with regard to the US: no matter how you spin it, this is not encouraging.
