WTI recovers from low-$64.00s to mid-$65.00s, but still down on the session
- WTI has recovered from session lows just above $64.00 to the mid-$65.00s, though is still down on the day.
- WTI traders await key events later in the week, as do traders of other asset classes.
Front-month futures contracts for the American benchmark for sweet light crude oil, West Texas Intermediary (or WTI), have recovered well from earlier session lows, rising back to the mid-$65.00s having been as low as the $64.10s during US trading hours. However, the WTI still closed Monday’s session in the red, down half a percent or about 30 cents. Futures trade closed at 21:00GMT, one hour earlier than usual in GMT given the recent time change in the US, but will reopen as usual one hour later at 22:00GMT.
Driving the day
No specific fundamental catalyst was behind Monday’s initial crude oil market sell-off, nor behind the subsequent recovery from lows. The modestly stronger US dollar was cited as weighing on the crude oil complex, as was some selling in stock markets (though US equity markets reversed aggressively in the second half of the session to close back in the green). With WTI prices only just over 4% away from recent cycle highs at just shy of the $68.00 level, profit-taking was also cited as a reason for the selling pressure.
In terms of fundamental catalysts, there wasn’t really any supply-side news. In terms of demand-side news, there was a lot of focus on an unfolding panic in Europe regarding the safety of the AstraZeneca vaccine amid growing concerns that the vaccine is linked to an increased risk of developing life-threatening blood clots – some traders cited this as also weighing on crude oil prices.
The rollout of the AstraZeneca vaccine has been falling like dominoes across EU nations; over the weekend, Irish and Dutch health authorities halted the rollout of the vaccine, following in the footsteps of Spanish, Norwegian and Danish authorities who halted rollouts in the days before. Now Italy, France and Germany have stopped vaccinations – the German vaccine regulatory agency said that more thrombotic events (i.e. blood clots in veins) have been reported since Thursday following vaccination by the AstraZeneca jab. UK and global health authorities, as well as AstraZeneca themselves, maintain the safety of the vaccine.
Looking ahead key events later in the week, such as Tuesday’s US Retail Sales data release and Wednesday’s FOMC meeting will be the major demand-side events to watch, while weekly crude oil inventory numbers will, as ever, also be key to watch.