Oil bears and bulls grapple as market puzzles over pandemic exit
Skip to main content
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
The Business Standard

Monday
February 06, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
MONDAY, FEBRUARY 06, 2023
Oil bears and bulls grapple as market puzzles over pandemic exit

Global Economy

Reuters
17 March, 2021, 11:00 am
Last modified: 17 March, 2021, 11:13 am

Related News

  • Pakistan's largest oil refinery shuts down
  • Oil falls about 3% as strong US jobs data prompt interest rate concerns
  • Oil heads for weekly loss awaiting China recovery signs
  • Oil climbs as dollar slumps, OPEC+ keeps output cut policy
  • Bangladesh proposes Saudi Arabia supply crude oil on deferred payment basis

Oil bears and bulls grapple as market puzzles over pandemic exit

Oil futures have already recovered to pre-pandemic levels, with Brent crude futures spiking $55 in less than a year to $70 a barrel this week while actual fuel demand remains weak

Reuters
17 March, 2021, 11:00 am
Last modified: 17 March, 2021, 11:13 am
A pump jack stands idle in Dewitt County, Texas January 13, 2016. REUTERS/Anna Driver/File Photo
A pump jack stands idle in Dewitt County, Texas January 13, 2016. REUTERS/Anna Driver/File Photo

Trading in oil futures is now as heavy as it was in the first months of the Covid-19 crisis, according to market data and analysts, with oil bulls and bears rushing to hedge against jolts in the steady rise of prices.

Oil futures have already recovered to pre-pandemic levels, with Brent crude futures spiking $55 in less than a year to $70 a barrel this week while actual fuel demand remains weak.

But speculation over when and if people will begin to travel and commute as they once did is driving dueling bets in the market and historic volumes of trade.

"What makes the current situation so pronounced is ... the duration of uncertainty around how the resolution will pan out," said Marc Rowell, senior energy broker at Britannia Global Markets.

Total monthly contracts for US WTI crude held by producers and merchants increased to more than 1 million in February for the first time since May, according to the US Commodity Futures Trading Commission.

Meanwhile, market open interest in ICE's Brent futures contract reached an all-time high of 2.8 million contracts on Feb. 19, topping its last record in April last year.

GRAPHIC: Open interest in WTI futures contracts -

Open interest refers to a trader's position in the market, long or short, and reflects their sentiment over future value.

Oil market participants engage in futures trading to mitigate risks by price changes to their business - producers generally use short positions to protect themselves from price increases while consumers use longs to hedge against decreases.

The recent surge in oil prices encouraged both producers and consumers to wade into the market with their competing bets, the US Energy Information Administration (EIA) said.

"The current prices provide an incentive for crude oil producers to secure a contract rate based on present highs," the EIA wrote this week.

"The potential for continued crude oil price increases is an incentive for physical market buyers to secure a contract rate at present levels in case prices continue to rise."

Waiting For Demand

Underscoring the instability is a disconnect between the four-month surge in the futures price and slow physical crude sales - with global demand expected to match supply only later in 2021.

"A key contributor to the ongoing volatility is speculative non-physical trading in the futures market," Rowell added.

"Until there is a change in momentum and price stability in line with the physical market, volatility is here to stay."

A solid return for global demand may be the only exit from the market's bumpiest-ever periods. Price volatility from the close of one trading day to the next last March hit highs last seen in the Gulf War, and the current highs are the highest since November.

GRAPHIC: Brent crude oil futures -

"This time, what is different is the dramatic decrease in consumer and commercial demand", said Gianna Bern, finance professor at the University of Notre Dame in Indiana.

"Price volatility remains so long as the impact of the pandemic is being felt."

Top News / World+Biz

Oil / oil market / Oil busines / Oil Business / Oil companies / Impact of Covid-19 / Economic Impact of Coronavirus / Effect of Coronavirus / Economic Effect of Covid-19 / Brent oil / Brent crude / crude oil

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • GDP growth drops to 7.1% in FY22, per capita income $2,793
    GDP growth drops to 7.1% in FY22, per capita income $2,793
  • Consumers should pay actual costs to get gas, electricity: PM
    Consumers should pay actual costs to get gas, electricity: PM
  • Dr Debapriya Bhattacharya. Illustration: TBS
    Development won't sustain sans political consensus: Debapriya 

MOST VIEWED

  • Jerome Powell, chairman of the US Federal Reserve, speaks during a news conference. Photographer: Al Drago/Bloomberg
    When the Fed's suspected of bluffing, it has a problem
  • Why Pakistan is struggling to get another IMF bailout
    Why Pakistan is struggling to get another IMF bailout
  •  Gautam Adani, center.Photographer: Tomohiro Ohsumi/Bloomberg
    Billionaires from Hong Kong to Arkansas exposed to Adani crash
  • FILE PHOTO: The logo of the Securities and Exchange Board of India (SEBI) is pictured on the premises of its headquarters in Mumbai, India March 1, 2017. REUTERS/Shailesh Andrade/Files
    On Adani row, SEBI says it's committed to ensuring market integrity
  • A broker monitors share prices while trading at a brokerage firm in Mumbai January 15, 2019/ Reuters
    Indian watchdog tells investors markets stable despite Adani rout
  • Demonstrators wait in line after entering the Presidential Secretariat premises, after President Gotabaya Rajapaksa fled, amid the country's economic crisis, in Colombo, Sri Lanka July 10, 2022. File Photo: REUTERS/Dinuka Liyanawatte
    Sri Lanka marks independence anniversary amid economic woes

Related News

  • Pakistan's largest oil refinery shuts down
  • Oil falls about 3% as strong US jobs data prompt interest rate concerns
  • Oil heads for weekly loss awaiting China recovery signs
  • Oil climbs as dollar slumps, OPEC+ keeps output cut policy
  • Bangladesh proposes Saudi Arabia supply crude oil on deferred payment basis

Features

Say it with Colours

Say it with Colours

22h | Mode
Photo: Courtesy

From 'Made in Bangladesh' to 'Designed in Bangladesh'

1d | Panorama
Google must adjust to a world where content is increasingly generated by AI. Photo: Bloomberg

Google will join the AI wars, pitting LaMDA against ChatGPT

20h | Panorama
The megaproject Rooppur Nuclear Power Plant has a debt of Tk90,474 crore. Photo: Courtesy

Projects funded with debt need to be selected prudently, and implemented timely

22h | Panorama

More Videos from TBS

ICB to withdraw Padma Bank Investment as return

ICB to withdraw Padma Bank Investment as return

14h | TBS Insight
Kiara Advani & Sidharth Malhotra's Wedding Update

Kiara Advani & Sidharth Malhotra's Wedding Update

14h | TBS Entertainment
What you probably didn't know about CR7

What you probably didn't know about CR7

12h | TBS SPORTS
US shoots down Chinese spy balloon

US shoots down Chinese spy balloon

13h | TBS World

Most Read

1
Leepu realised his love for cars from a young age and for the last 40 years, he has transformed, designed and customised hundreds of cars. Photo: Collected
Panorama

'I am not crazy about cars anymore': Nizamuddin Awlia Leepu

2
The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. REUTERS/Yuri Gripas/File Photo
Economy

IMF approves $4.7 billion loan for Bangladesh, calls for ambitious reforms

3
Fund cut as Dhaka's fast-track transit projects on slow spending lane
Infrastructure

Fund cut as Dhaka's fast-track transit projects on slow spending lane

4
Photo: Collected
Court

Japanese mother gets guardianship of daughters, free to leave country

5
Belal Ahmed new acting chairman of SIBL
Banking

Belal Ahmed new acting chairman of SIBL

6
Photo: Collected
Startups

ShopUp secures $30m debt financing to boost expansion, supply chain

EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]