The oil rally was principally a result of the positive market sentiment created by the outlook for fiscal stimulus in the United States and reports regarding covid-19 vaccines’ effectiveness.
The optimism damaged the dollar, supporting commodities priced in the US currency. But it seems like the optimism has been declining as traders have been shifting towards safer assets. Consequently, crude slumped, though the Brent grade has still been trading over the $60 level at the writing time.
Besides the market sentiment, oil had its own ideas to rally.
OPEC+ oil production cuts, especially the declaration by Saudi Arabia to cut its output past the accepted amount, extended to support prices.
On top of that, supply from Libya has been interrupted. This is due to the Petroleum Facilities Guards’ ongoing strike at the country’s export terminal over postponed salary payments. Meantime, Iran’s export still has difficulty reaching the global market. The reason behind this is that the United States maintains penalties facing the Middle Eastern nation.
Futures for WTI crude oil delivery in March fell by $0.38 (0.66%) to $57.59 per barrel as of 11:41 GMT on NYMEX today. Brent crude for delivery in April slumped by $0.21 (0.35%) to $60.35 per barrel on ICE. March natural gas fell by $0.07 (2.46%) to $2.81 per million British thermal units on NYMEX.