2020–2022 world oil market chronology

2020

On January 3, 2020, WTI finished up 2.2 percent for the week at $63.05, the highest since May, after U.S. air strikes in Iraq, with Brent up 2.6 percent for the week at $68.60.[1] Then oil fell for five straight days before rising again; the U.S. "backed away from military confrontation" with Iran, and stockpiles were higher. WTI fell 6.4 percent for the week, the most since July, and on January 13 had its lowest close since December 3 at $58.08. Brent fell 5.3 percent, the most since August, and then reached its lowest close since December 12 with $64.20.[2][3]

On February 10, oil reached its lowest level in over a year, with the COVID-19 pandemic a major reason. WTI fell 1.5 percent to $49.57, the lowest since January 2019, and Brent dropped 2.2 percent to $53.27, the lowest since December 2018. Russia had not agreed to further production cuts, though OPEC had a plan.[4] Despite a forecast for lower demand, expectations of OPEC action led to three days of gains, with WTI reaching $51.42 and Brent $56.34.[5] WTI ended February 28 down more than 16 percent for the week, the most in 11 years, falling 5 percent to $44.76 on February 28. Brent closed at $50.52. Both were the lowest since December 2018. Warmer than usual weather was one reason but the major factor was concerns about economic slowdown due to COVID-19.[6][7]

During the 2020 Russia–Saudi Arabia oil price war, on March 8 oil fell over 30 percent. WTI reached $31.13, down 24.6 percent, with Brent $34.36, down 24.1 percent. Both were the lowest since 2016 and the one-day decline was the largest since 1991.[8] On a week when oil fell the most since 2014, Russia rejected plans by OPEC and others to help calm the oil market, and Saudi Arabia was expected to increase production.[9]

With worldwide demand continuing to decline due to COVID-19, oil fell for a fifth straight week at the end of March and any actions taken by Saudi Arabia or Russia would be inconsequential. During the last full week of March WTI fell about 5 percent to end at $21.51, with Brent down 7.6 percent for the week to $24.93.[10] The price of Canadian heavy crude dipped below $5 per barrel.[11]

In the first quarter, the percentage loss was the worst ever, 66.5 percent for WTI and 65.6 percent for Brent. Then on April 2, WTI jumped 24.7 percent to $25.32 and Brent rose 21 percent to $29.94, the biggest percentage increase in a single day ever, in anticipation of significant production cuts.[12] OPEC agreed to production cuts on April 12; these would be greater in 2020 than in future years. U.S. crude supplies had risen for 12 weeks, including the largest increase for a week as of April 10. On April 14, the difference between the front month contract and contracts for later delivery were the most since 2009 for WTI, which traded $14.45 below the September contract. On April 17, May WTI was $18.27 but June WTI was $28.08. For Brent, the June contract was $28.08 while October was $35.95. The difference between the two was less because Brent did not require as much storage capacity.[13] On April 20, the front month contract for WTI fell below zero, an unprecedented event. With the contract for May delivery expiring on April 21, the contract for June delivery became the new front month contract; on April 22 after settling at $13.78, WTI was the lowest since the 1990s.[14]

On May 6 WTI fell after five days of increases, settling at $23.99 a day after a 20 percent jump to the highest close since April 17 with expectations of higher demand as countries around the world eased restrictions. Brent finished at $29.72 a day after a 14 percent jump. U.S. crude inventories were up for the 15th week, but by less than expected.[15]

On May 21, WTI settled at $33.92 and Brent at $36.06, both the highest since March 10. U.S. crude supplies were down for the second week, and OPEC production was down. Positive economic news from Europe and the United States also contributed, although possible tensions with China limited gains.[16]

WTI fell more than 8 percent on June 11, the most since April 27, and ended the week at $36.26 with its first down week in seven weeks. WTI and Brent both ended the week down over 8 percent. OPEC production cuts could not overcome COVID-19 concerns.[17] For the week ending June 19, WTI climbed nearly 10 percent to $39.75 as OPEC made sure countries were complying with goals for output decreases.[18] WTI fell nearly 6 percent June 24 then rose slightly the next day to close at $38.72, while Brent fell more than 5 percent and rose slightly to $41.05, in a week where both have fallen nearly 3 percent. Some U.S. states were delaying reopening, and others were going back to lockdowns. Also, U.S. supplies climbed for the third week while U.S. crude production was down 20 percent since early March. OPEC nations were continuing their production cuts. A negative forecast for the world economy also affected oil prices.[19]

On July 15, after the largest drop in U.S. crude supplies of the year, WTI reached $41.20 and Brent $43.79, the highest since March 6 for both.[20] That same day, OPEC and others said they planned to decrease production cuts in August but FXTM analyst Lukman Otunuga said it might not be the time for that given the chances of more COVID-19 related lockdowns or problems with the world economy.[21]

The first week of August ended with WTI up 2.4 percent to $41.22 and Brent up 2 percent to $44.40. Production cuts took effect on August 1 but U.S. president Trump signed executive orders which added to tensions with China and helped drive prices down.[22]

In the third week of August Brent fell 1 percent to $44.35, while WTI ended the week at $42.34 after the number of U.S. oil rigs rose after falling for three weeks. COVID-19 concerns have led to expectations of lower demand.[23]

Low demand for oil in the U.S., lower U.S. unemployment, a strong U.S. dollar and losses in the stock market contributed to WTI falling nearly 4 percent on September 4 to $39.77, the first time below $40 since July. WTI ended the week down 7.5 percent after four up weeks, and Brent finished the week at $42.66, down nearly 7 percent. Demand for gasoline had recovered more quickly than demand for other petroleum products, and Michael Tran of RBC Capital said supplies fell at a "manic pace" over two months. Other products still had high inventories.[24] Bad news about U.S. unemployment, a strong dollar, lower expected demand, and higher U.S. crude supplies contributed to the second down week for WTI, which fell 6.1 percent to $37.33. Brent fell 6.6 percent for the week to $39.83. This was the first time oil fell for two straight weeks since April.[25]

For the week ending September 25, oil fell for the third time in four weeks due to COVID-19 concerns, fear that the U.S. recovery would slow down, and a higher U.S. dollar. WTI ended at $40.25, down 2.6 percent, and Brent was down 2.9 percent, with the most active contract ending at $42.41.[26]

As a result of U.S. President Donald Trump being diagnosed with COVID-19, WTI fell 4.3 percent on October 2 to finish the week down 8 percent at $37.05, the lowest since September 8. Brent dropped 4.1 percent and 7.4 percent for the week to $39.27, the lowest since June 12. Continued concerns about the pandemic reducing demand also contributed even as U.S. supplies fell.[27] An increase in U.S. inventories and an end to negotiations on COVID-19 relief in the U.S. contributed to another drop on October 7, with WTI down to $39.95 and Brent at $41.51.[28] Increased imports from China helped oil rise by 2 percent on October 13, and expected production cuts by OPEC and allies led to a continued rise on October 14 to $41.04 for WTI and $43.32 for Brent. COVID-19 cases and high inventories, however, made the trend unlikely to continue.[29]

Restrictions in Europe due to COVID-19 and expected delays for production cuts by OPEC and allies caused oil to rise November 2 for the first time in four trading days. WTI jumped from $33.64 to $36.81 and Brent rose from $35.74 to $38.97.[30]

WTI and Brent both reached their highest settlements since September on November 18, with WTI at $41.82 and Brent at $44.34. One major factor was good news about COVID-19 vaccines. U.S. crude inventories rose more than expected, and uncertainty about OPEC and COVID-19 lockdowns contributed to lower prices the next day.[31][32] Just before Thanksgiving, gas was $2.11, the lowest at that time of year since 2016 and 49 cents lower than a year earlier.[33]

OPEC predicted lower demand on December 14, partly as a result of COVID-19 restrictions in Europe and the United States, and the IEA did the same on December 15. However, demand appeared likely to rise in China, and a pandemic relief package appeared more likely in the United States, while COVID-19 vaccines became available. WTI ended December 15 at $47.62, the highest since February, and Brent reached $50.76, the highest since March. [34]

WTI ended 2020 at $48.52, down 20.5 percent in its second down year in three years but up 7 percent for the month and more than 20 percent for the quarter. Brent finished at $51.80, down 21.5 percent for the year but up 8.9 percent for December and 26.5 percent for the quarter. A weak dollar and lower than expected U.S. inventories kept oil high.[35]

2021

After Saudi Arabia promised further production cuts, WTI reached $51.28 on January 7 and Brent climbed as high as $54.90, the highest since before COVID-19.[36] On January 14, a weaker dollar and an expected COVID-19 relief package helped oil move slightly higher, with WTI at $53.57 and Brent at $56.42, though Europe was experiencing more lockdowns and China had a higher number of COVID-19 cases, both making lower demand likely.[37]

WTI finished the first week of February up 8.9 percent to $56.85 and Brent was up 7.8 percent to $59.34, the highest since January 2020 for both. COVID-19 vaccines were a big reason for positive economic news, though analyst Eugen Weinberg of Commerzbank believed optimism was too high.[38]

See also

References
  1. Myra P. Saefong and William Watts (January 3, 2020). "Oil settles more than 3% higher after U.S. airstrike kills Iranian military commander". Market Watch.
  2. Myra P. Saefong and William Watts (January 13, 2020). "Oil prices fall for a fifth straight session". Market Watch.
  3. Myra P. Saefong and William Watts (January 14, 2020). "Oil prices settle higher for the first time in 6 sessions". Market Watch.
  4. Myra P. Saefong and William Watts (February 10, 2020). "Oil drops back to 1-year low as coronavirus takes toll on China crude demand". Market Watch.
  5. Myra P. Saefong and William Watts (February 10, 2020). "Oil drops back to 1-year low as coronavirus takes toll on China crude demand". Market Watch.
  6. Myra P. Saefong and William Watts (February 28, 2020). "U.S. oil futures suffer largest weekly percentage loss in over a decade". Market Watch.
  7. Myra P. Saefong and William Watts (February 27, 2020). "Oil finishes at lowest in over 13 months as coronavirus keeps market in 'stranglehold'". Market Watch.
  8. William Watts (March 9, 2020). "Why an 'oil shock' sent the Dow down 2,000 points and upended global financial markets". Market Watch.
  9. Mark DeCambre (March 8, 2020). "Oil plunges 25% and investors brace for a race to the bottom, as an all-out OPEC 'price war' erupts between Saudi Arabia and Russia". Market Watch.
  10. Myra P. Saefong and William Watts (March 27, 2020). "Plunge in global crude demand sends oil prices down for a 5th straight week". Market Watch.
  11. "Canadian heavy oil collapses another 28% to under $5 as oilsands face shut-ins | Financial Post". 27 March 2020. Archived from the original on 2020-03-30.
  12. Myra P. Saefong and Barbara Kollmeyer (April 2, 2020). "Oil rallies, with U.S. prices up nearly 25% as Trump expects Saudi Arabia and Russia to cut production". Market Watch.
  13. Myra P. Saefong (April 18, 2020). "Oil market in 'super contango' underlines storage fears as coronavirus destroys crude demand". Market Watch.
  14. Mark DeCambre (April 22, 2020). "About 150-years of oil-price history in one chart illustrates crude's spectacular plunge below $0 a barrel". Market Watch.
  15. Mark DeCambre and Myra P. Saefong (May 6, 2020). "Oil futures settle lower on storage capacity concerns, despite a smaller-than-expected rise in U.S. crude supplies". Market Watch.
  16. Myra P. Saefong and Mark DeCambre (May 21, 2020). "Oil ends at six-week high on tighter supplies, demand prospects". Market Watch.
  17. Myra P. Saefong and Mark DeCambre (June 19, 2020). "Oil prices end slightly lower, post first weekly loss in 7 weeks". Market Watch.
  18. Myra P. Saefong (June 19, 2020). "Oil futures end higher, with U.S. prices up nearly 10% for the week". Market Watch.
  19. Myra P. Saefong and Mark DeCambre (June 25, 2020). "Oil prices settle higher after 2-session drop, but demand worries persist on coronavirus flare-up". Market Watch.
  20. Myra P. Saefong and William Watts (July 15, 2020). "Oil prices at 4-month high as U.S. crude supply posts biggest decline of the year and OPEC+ tapers output cuts". Market Watch.
  21. Myra P. Saefong and William Watts (July 17, 2020). "Oil settles lower, posting modest change for week as rise in coronavirus cases stokes demand worries". Market Watch.
  22. William Watts (August 7, 2020). "Oil lower as U.S.-China tensions mount, but logs weekly gain". Market Watch.
  23. William Watts (August 21, 2020). "Oil ends lower on demand worries". Market Watch.
  24. Myra Saefong and William Watts (September 4, 2020). "U.S. oil benchmark ends below $40 a barrel, down over 7% for the week". Market Watch.
  25. Myra Saefong and William Watts (September 11, 2020). "Oil prices suffer a second weekly fall on demand worries". Market Watch.
  26. Myra Saefong and William Watts (September 25, 2020). "Oil prices suffer a second weekly fall on demand worries". Market Watch.
  27. Myra Saefong and Barbara Kollmeyer (October 2, 2020). "Oil sells off after Trump's coronavirus diagnosis, sending U.S. prices down 8% for the week". Market Watch.
  28. "Oil falls nearly 2% on oversupply concerns". CNBC. Reuters. October 7, 2020.
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  30. Myra Saefong and William Watts (November 2, 2020). "Oil ends higher as COVID Europe lockdowns feed expectations that OPEC+ may postpone output-cut curbs". Market Watch.
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  33. Myra Saefong (November 21, 2020). "Thanksgiving could see almost half as many travelers, despite the lowest seasonal gas prices in 4 years". Market Watch.
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  37. Devika Krishna Kumar (January 14, 2021). "Oil hits 11-month highs on Saudi cuts, shrugs off U.S. turmoil". Reuters.
  38. Myra P. Saefong and William Watts (February 5, 2021). "Oil futures settle higher, with U.S. prices up 9% for the week". Market Watch.
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