Oil retreats from 1-yr high alongside market selloff
Oil edged lower as crude’s rally on a tightening global supply outlook lost some momentum amid a broader market decline.
Futures in New York fell as much as 0.9 per cent on Thursday with US equities weakening amid concerns that markets could soon face accelerating inflation. Meanwhile, technical indicators show crude hovering in overbought territory after skyrocketing to one-year highs this week.
“Oil has had an incredible run,” so prices were due for a correction, said Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago. “But the tailwinds of oil going up are still there, so any kind of correction will likely be short-lived.”
The oil futures curve continues to signal a tighter market in the midst of global inventories declining. Brent’s nearest timespread is trading at a nearly $6 a barrel premium to the contract 12 months out, a bullish structure known as backwardation.
Oil is witnessing a stellar start to the year after Saudi
Arabia’s deeper output cuts accelerated a rally triggered by
Covid-19 vaccine breakthroughs. While there’s been a raft of calls by banks for oil prices to further rally, the market is facing a possible supply increase in April from Opec+. The producer group meets next week to discuss its strategy with key members again differing on the path forward.
Opec+ is “getting antsy now with prices being where they are,” said John Kilduff, a partner at Again Capital LLC. “They have a lot of spare capacity among themselves and the group, so it makes sense that they would want to respond.”
Shale explorers reported almost 6 million barrels of combined oil-output losses during the freeze last week. Occidental Petroleum and Pioneer Natural Resources, two of the largest producers in the Permian Basin, alone had a combined loss of about 3.8 million barrels, according to
News calculations based on fourth-quarter earnings reports and calls.
The United Nations (UN) Working Group on Arbitrary Detention (WGAD), which operates under the UN High Commissioner for Human Rights, has slammed India on the 27-month incarceration of British businessman Christian Michel without prosecution. It has also asked the Narendra Modi government to immediately release him and provide an enforceable right to compensation in accordance with international law.
Michel’s lawyers revealed WGAD recorded in its ‘Opinion No 88/2020’ that “the violations of the right to a fair trial and due process are of such gravity as to give Michel’s deprivation of liberty an arbitrary character”.
It concluded India has contravened the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights. WGAD has referred the matter to the UN Special Rapporteur on Torture for further action.
WGAD also ruled Michel was unlawfully arrested and handed over to India by the UAE government. He was asked by the Central Bureau of Investigation to sign a preposterous confession under duress to say he paid bribes to the Gandhi family of the Congress party to procure an order for Agustawestland VVIP helicopters when the United Progressive Alliance was in government. His lawyers maintain this is a charge trumped up by the Modi administration. WGAD’S order has all but upheld Michel’s innocence.