A rally in oil that got underway at the start of November has stalled over the last couple of weeks as the market digested signs that demand is worsening. Both contracts rose more than 2 per cent in the previous session.
Crude's market structure keeps strengthening, suggesting the large stockpiles built up past year are shrinking fast and will continue to do so.
There are pockets of physical-market strength, too. The oil major also bid for a further seven shipments in a flurry of activity.
"With inventories starting to drop in 2H20, the structure of the futures curve has shifted to become downward sloped". Nearby Brent timespreads are trading in their biggest backwardation in a year, suggesting supply tightness.
Crude oil prices have regained momentum on fuel demand recovery hopes over vaccine rollouts. Still, with cold weather sweeping across the US and much of Wall Street anticipating inventory draws in the coming months, prices continue to surge higher.
"We see a growing risk that an Iranian nuclear deal could come as soon as Q2 and pencil in the return of 1 million b/d of Iranian oil by end-2021". It was 7 cents in contango at the beginning of the year.
OPEC may also be adding less supply into the market than expected.
The U.S. market was set for a dip in consumption in the North East as a large snowstorm prepared to strike New York City and the surrounding region, an event likely to take most of the region's cars off the road temporarily.
The total operating rigs rose to 295, the highest level since the week ending May 1, 2020.
China National Offshore Oil Corp. said the nation's lofty climate goals won't interrupt its program to raise oil and gas output.
In the futures market, crude oil for February delivery touched an intraday high of Rs 3,992 and an intraday low of Rs 3,944 per barrel on MCX. But the coalition will soon be faced with some tough choices.