Oil prices fell 7% on Thursday, the most since September of last year, as new forecasts project global oil demand will remain weak in the coming decade.
West Texas Intermediate crude futures declined for a fifth session Thursday, the longest stretch of daily losses in more than a year. China lifting less crude and U.S. Gulf Coast refineries still recovering from a cold blast last month have put short-term pressure on physical oil demand.
Meanwhile, some efforts to distribute COVID-19 vaccines have faltered and a stronger dollar is reducing the appeal of commodities priced in the currency. Plus, new forecasts predict demand for crude oil will remain weak in the coming decade as reliance on fossil fuels declines and electric vehicles replace gasoline powered cars.
The collapse in oil prices has wiped out more than two weeks of gains for the U.S. benchmark crude and represents a setback for a market that has otherwise staged a recovery since the depths of the global pandemic.
Oil futures are still up more than 20% since the start of the year with the world’s largest oil producers reining in supply and travel around the world recovering.
Oil’s move lower may also be linked to some unwinding of long positions by commodity trading advisors as daily price gains or losses of more than 3% can often trigger funds to quickly unload.
West Texas Intermediate crude’s front-month contract is trading at a discount again to the following month, while Brent’s backwardation -- a bullish structure signaling tighter supplies -- is weakening. West Texas Intermediate for April deliveries slid $4.60 U.S. to $60 U.S. a barrel, the lowest since early March of this year. Brent for May settlement fell $4.72 U.S. to end the session at $63.28 U.S. a barrel.
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