The barrel of Brent fell 10% this week, wiping out more than two weeks of gains. Investors consider the recovery fragile in the short term, as prices have already rebounded very strongly since the crisis of last year.

The oil market had not experienced such a stall for six months.

The oil market had not experienced such a stall for six months. The barrel of US WTI and that of Brent in the North Sea fell more than 8% Thursday night, the former falling below $ 60. Over the week as a whole, the drop reached 10%, a collapse that wiped out more than two weeks of gains. Investors have been worried for several days about the slowdown in vaccination campaigns in some countries. This slowdown calls into question the short-term recovery and its corollary, the rebound in global oil demand.

Early Friday afternoon, Brent was almost stable at around $ 63. If the fall accelerated considerably on Thursday, it was actually five consecutive sessions that oil was losing ground, an unusual situation. The rough had not known such a long slide “Since April 2020”, UBS analysts report.

Increase of more than 20% since the start of the year

It must be said that the rebound since the crisis of last year has been spectacular. The market has come to wonder if the rise (over 20% since the start of the year despite the fall on Thursday) would not have been a little too fast.

Read also:

Texas cold snap drives oil prices soar

The AstraZeneca vaccine against Covid-19 has been suspended for several days in most countries of the European Union. All the delays in the vaccination campaign in Europe have led Goldman Sachs analysts to delay their forecasts for a recovery in demand for petroleum products on the Old Continent by one month. These obstacles could penalize global demand to the tune of one million barrels per day in 2021 (out of a total of 95 million), calculated the firm Rystad Energy.

Two years before returning to pre-crisis levels

Another news that weighs on prices, in the United States, crude stocks, at 500 million barrels, are at their highest level since early December. Above all, in its monthly report, the International Energy Agency estimated that after the shock of the health crisis, global demand for black gold could take two years to return to its pre-crisis levels.

In the short term, some observers are talking about a drop in demand, especially from China, but also from American refineries on the Gulf of Mexico coast which are still struggling to recover from the cold snap of February. Despite the prospects for a longer-term recovery, demand remains fragile for the time being.

Brent at $ 80 this summer?

Moreover, it is the contracts with the shortest terms that suffer the most. They are trading again – as at the height of the Covid crisis in March 2020 – at a discount to longer-term contracts.

Experts are divided on the future evolution of prices. “The time when a barrel of Brent will rise to $ 70 has not yet arrived,” said Michael Lynch, president of Strategic Energy & Economic Research at Bloomberg. For Goldman Sachs analysts on the contrary, prices will rise to $ 80 this summer, as stocks accumulated last year return to normal levels.

An unbalanced market

Thursday’s fall is only “transitory” according to them. The world market remains unbalanced, with production below consumption by some 2.5 million barrels a day since February. In the medium term, demand will be driven, in particular, by Joe Biden’s recovery plan.

Read also:

INTERVIEW Sophie Zurquiyah, Managing Director of CGG “Oil companies will have to keep investing”