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Oil set for 20% drop in 2020 as lockdowns weigh

Category: Economy

Date: 2020-12-31T09:57:56+0000
Oil set for 20% drop in 2020 as lockdowns weigh

Shafaq News/ Global crude oil markets have lost about a fifth of their value in 2020 as strict coronavirus lockdowns paralyzed much of the global economy, but prices have rebounded strongly from their lows as governments rolled out stimulus.

On Thursday, the last trading day of 2020, Brent was trading down 5 cents, or 0.05%, at $51.58 a barrel, as of 0530 GMT and U.S. West Texas Intermediate (WTI) lost 0.06%, or 12 cents, to $48.38 a barrel.

“It is kind of year-end quiet but a weaker dollar is helping keep a floor under markets,” Reuters quoted Stephen Innes, chief global market strategist at Axi as saying.

Brent and WTI have more than doubled from decade-lows seen in April, putting past a year which marked the first negative prices for WTI that shocked investors globally.

Asian shares are set to end a tumultuous 2020 by hovering near record highs on Thursday while riskier currencies cruised near 2-1/2-year peaks, buoyed by hopes that COVID-19 vaccine rollouts will help the world beat the pandemic.

The dollar was ending 2020 in a downward spiral on Thursday with investors wagering a global economic recovery will suck money into riskier assets even as the yawning U.S. twin deficits argue for an ever cheaper currency.

In the short-term, concerns over coronavirus lockdowns are likely to cap gains.

A new variant of the virus in the United Kingdom has led to the reimposition of movement restrictions, hitting near-term demand and weighing on prices, while hospitalizations and infections have surged in parts of Europe and Africa.

On the supply front, U.S. energy firms this week added 3 oil and natural gas rigs to the best quarter for boosting the rig count since the second quarter of 2017, according to data from Baker Hughes.

A Jan. 4 meeting of the Organization of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, is set to boost output by 500,000 barrels per day in January.

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