Oil prices hold firm this week but uncertainty still rules the day
Global stock markets had a good close to the week, despite a bumpy few days of losses
The oil market maintained strength this week, despite the usual intraday volatility caused by uncertainty in the economy and pandemic recovery and review.
The shutdown and restart of a major US pipeline was an issue for the American market and many questions remain. In Friday trading, Brent crude was priced above US$67 with West Texas Intermediate (WTI) holding above US$64 a barrel.
Global stock markets had a good close to the week, despite a bumpy few days of losses.
Sentiment on the turn?
This helped the oil price on Friday as economic sentiment seems to be turning positive.
US government data showed consumer and producer prices rising and unemployment dipped slightly.
The president of Prestige Economics, Jason Schenker said that “with more vaccinations, initial jobless claims are likely to fall further, but they could remain elevated above pre-COVID levels for some time”.
Mask wearing restrictions are being removed for vaccinated Americans and many hope this might lead to more social interaction and increased retail sales.
Schenker added that the US economy is still in a delicate position with inflation rapidly on the rise and a sustained dovish position from the Federal Reserve.
Americans paid more for gasoline as they queued at the pump this week when the vital east coast Colonial pipeline was shut down as a result of a cyber-attack.
The company took the decision to shut down essential pipeline services and is delivering updates on Twitter as its website remains offline.
A ransomware infection in the computer software caused the problem last Friday with shortages of gasoline for a few days.
The pipeline is more than 5,000 miles long and carries 2.5 million barrels of fuel from Texas to New Jersey. The FBI confirmed that the sabotage was caused by the hacker group DarkSide, saying their intention was to make money not cause such problems.
Back on-line
The pipeline was back on-line by the close of the week after media reports that the company paid the hackers more than US$5 million dollars on bitcoin to regain access to the data and its assets.
The company did not confirm any payment to the group. A statement from the Chairman of the Federal Energy Regulatory Commission (FERC) Richard Glick, said the cyber-attack “is a stark reminder that we must do more to ensure the safety of our nation’s energy infrastructure”.
The Twitter-sphere was alight with expert commentary about cyber security with the president of Rapidan Energy Group, Bob McNally adding if the company paid the ransom to the attackers “then the threat to our energy security is much greater”.
He added, that “having proved they can bring America to its knees and get paid, expect cyber pirates to target vital infrastructure again”.
OPEC and the International Energy Agency delivered their monthly oil reports, both agreeing on expectations of a rebound in global oil demand by the end of the year.
The IEA cut its forecast for 2021 but says it still sees strong recovery as vaccination programmes are rolled out across the world. The IEA noted a fall in oil demand last month due to lack of demand in India. IEA is still expecting global oil demand to reach 96.4 million barrels a day for 2021.
OPEC’s report maintained its forecast for global oil growth at 96.5 million barrels a day with consumption in 2021 growing by 6 million barrels a day.
The organisation says it expects US shale production to decline this year. While these growth figures are certainly positive, OPEC estimates that demand will still be about 3.5% below 2019 figures. OPEC is encouraged by recent economic data, raising its forecast for global economic growth to 5.5% for 2021.
Renewed focus on Middle East
There’s renewed focus on the Middle East this week as violence escalates in Israel.
There’s been reports of energy infrastructure attacks on both Israeli and Palestinian…
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