Market news

17 December 2021

WTI dips back into low $71.00 as risk aversion sets in

  • WTI has dipped back from Thursday’s test of weekly highs at $73.00 to the low $71.00s.
  • Risk appetite has faded as traders mull this week’s hawkish central bank events and the evolving Omicron situation.

Oil prices are under pressure on Friday amid a downturn in the market’s broader appetite for risk as traders mull this week’s hawkish turn from many G10 central banks and a continued rise in Omicron infection rates across the world. After matching early weekly highs just under $73.00 on Thursday, front-month WTI futures have since dipped all the way back to test the $71.00 level. At current levels in the low-$71.00s, WTI is set to end the week lower by about 50 cents or 0.8% and close to the centre of this week’s $69.40-$73.00ish range.

Major G10 central banks are becoming more hawkish, with the Fed doubling its QE taper pace and indicating three hikes in 2022, while sounding bullish on the economic outlook for 2022 despite Omicron. Meanwhile, the BoE actually implemented a surprise 15bps hike and the ECB laid out its QE taper plans for 2022, with the PEPP to end as planned in March. Some saw this as a vote of confidence in the durability of the global recovery, which perhaps aided crude oil markets at the time, though on Friday, focus has returned to a worsening Omicron picture.

Cases are at record highs in the UK, Denmark and South Africa and surges in the EU and US are expected next. Further pandemic curbs are likely as authorities scramble to slow transmission, though the most important uncertainty right now is whether the surge in infection rates will translate into a surge in hospitalisations and ultimately fatalities. Uncertainty about this is likely to keep oil market participants in two minds until the end of the year, meaning WTI may well remain trapped within recent ranges.

Goldman bullish on oil demand

Damien Courvalin, Goldman's head of energy research, said on Thursday that the Omicron variant hadn’t had much of an impact on mobility or oil demand as of yet according to high-frequency data. Moreover, oil demand in 2022 was expected to be strong amid rising global capital expenditure and infrastructure construction, he added. As a result, Courvalin said that Goldman sees average daily oil demand hitting fresh record highs in 2022 and 2023. Thereafter, Goldman expects steady growth in oil demand until the end of the decade until demand peaks at about 106M barrels per day, amid a gradual energy transition.

 

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location