Oil prices fell for the week ending Jan. 31 with the price of West Texas Intermediate (WTI) for March delivery down 4.85 percent and Brent crude oil for March delivery down 4.17 percent.
After four consecutive weeks of decline in oil prices, WTI and Brent crude decreased by 15.56 percent and 11.88 percent, respectively, in January, witnessing the biggest monthly loss since May 2019.
Rising crude inventories were only part of the problem. The market was concerned that the recent coronavirus outbreak will stymie oil demand in China.
WTI closed the week at 51.56 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 58.16 dollars a barrel on the London ICE Futures Exchange, falling below the 60-dollar threshold.
The U.S. Energy Information Administration reported on Wednesday a build of 3.548 million barrels of crude oil inventories during the week ending Jan. 24, more than an expected increase of 0.482 million barrels, implying weaker demand and bearish for crude prices.
Meanwhile, the U.S. Dollar Index closed the week below the 98.00 level after testing 2020 highs. The index met some solid resistance near 98.20. A higher index makes the U.S.-dollar-sensitive crude oil more expensive for foreign buyers.
The Organization of the Petroleum Exporting Countries (OPEC) is trying to keep prices from dipping any more. The market expects the OPEC and its allies to push additional cuts of crude oil output when next meeting in February or March.
However, analysts believe that current market fundamentals have prevented any significant bull run on oil prices and the market is susceptible to softer prices if the outbreak stretches through February, even as Libyan exports remained halted by a political dispute.
“The uncertainty in oil prices and world demand, especially with the recent international geopolitical tension and health events, have continued to stifle acquisition and development activity for U.S. oil and gas producers,” Robert Martinez, CEO of Titan Rock Exploration and Production, told Xinhua.
According to Martinez, price instability kills deals, and “the price swing cycles are more frequent than what a typical deal cycle takes from evaluation to close.” Enditem