Thanks to Thursday’s selloff, this week brought the largest 1-wk drop since the height of the pandemic. This week, oil markets lost nearly $6/bbl, almost a 10% drop. The last weekly crude drop of that magnitude came in March and April 2020.
The week began innocuously, with headlines of strong growth in China and falling US rig counts. Some rumblings of China purchasing Iranian oil gave some pause, stoking fears that excess crude might find its way onto global markets and add to the supply glut.
Fears over the weekend about the AstraZeneca vaccine added to concerns about oil fundamentals. EU countries began pausing vaccine rollouts due to reports of blood clotting. But later in the week, the EU’s drug regulating agency declared the vaccine safe for mass distribution. Even with the safe declaration, the commotion reminded the market that vaccine rollouts may not always be smooth and that many countries are falling behind expectations.
The EIA reported an inventory build for crude, diesel, and gasoline, along with a big uptick in refinery utilization. Gulf Coast refiners increased their throughput by 10 percentage points, rising to 70% utilization. The build was bearish for markets – although the crude build was far smaller than recent builds, the surprise build for fuel inventories reiterated that demand has not yet fully recovered from the pandemic.
This Week in Energy Prices
Oil prices fell steadily throughout the week, but most of the losses were concentrated on Thursday. Prices have fallen for five consecutive trading sessions, the longest streak in months. Crude opened the week at $65.56 and opened Friday morning at $59.56, a loss of exactly $6/bbl (9.2%).
Diesel prices also plummeted this week, following crude’s lead. Opening at $1.9649, prices opened Friday at $1.7714, a loss of 19.4 cents (9.8%).
Like other products, gasoline stumbled all week. Gasoline prices opened the week at a lofty $2.1520, but fell each day. This morning, gasoline opened at $1.9222, leading the market with losses of 22.3 cents (-10.7%).