- Gennaio 18, 2022
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
Spot crude oil prices closed 2021 significantly higher y-o-y, witnessing the best yearly performance in a decade, with North Sea Dated and Dubai prices recording the largest yearly average increase since 2011. On a yearly average, North Sea Dated and Dubai rose in 2021 by $29.13 and $27.07, or 69.9% and 64.0% respectively y-o-y, to stand at $70.80/b and $69.38/b, while WTI rose by $28.74/b, or 72.9%, to average $68.17/b.
However, major spot crude oil benchmarks dropped about 9% in December m-o-m, extending November’s losses. The drop was driven by a sharp decline in the futures markets amid concerns about record-high COVID-19 cases, including in several major oil-consuming countries. Nonetheless, the fundamentals of the physical crude oil market remained relatively robust in December.
The OPEC Reference Basket (ORB) averaged lower in December m-o-m, falling for the second consecutive month on lower related crude benchmarks. The ORB fell by $5.99, or 7.5%, to settle at $74.38/b, its lowest monthly value since September 2021. However, on a yearly average, the ORB value rose by $28.42, or 68.5%, in 2021 to $69.89/b, its highest yearly average since 2014.
Crude oil futures prices ended 2021 markedly higher compared with late 2020, with major oil futures contracts ICE Brent and NYMEX WTI rising 50% and 55%, respectively. However, in December, crude oil futures prices declined for the second consecutive month, falling from multi-year highs registered in October, amid persistent market volatility that remained fuelled by rising uncertainty regarding the impact of the rapidly spreading COVID-19 Omicron variant on the global economy and oil demand. The ICE Brent front-month decreased by $6.05, or 7.5%, in December to average $74.80/b, and NYMEX WTI fell by $6.96, or 8.8%, to average $71.69/b. DME Oman crude oil futures prices decreased in December by $6.30 m-o-m, or 7.9%, to settle at $73.40/b. Consequently, the ICE Brent/NYMEX WTI spread widened by 91¢ to an average of $3.11/b.
Hedge funds and other money managers extended sharp selling in the first half of December, cutting combined futures and options net long positions related to ICE Brent and NYMEX WTI by about 30% between early November and mid-December, representing the sale of equivalent to 174 mb. The selloff came amid a decline in oil futures prices, while speculators were probably considering the worst-case scenario regarding the impact of the Omicron variant on global oil demand.
The market structure of all three crude benchmarks ‒ ICE Brent, NYMEX WTI and DME Oman ‒ weakened in December compared with the previous month. This is mainly due to concerns about the rapid surge of global COVID-19 cases to record high levels in several major consuming countries. However, a continuing decline in global oil stocks and a robust physical crude market kept the market structure in backwardation, while supply disruptions in some countries in December lent support to the structure.
The premium of light sweet to medium sour crudes recorded different trends in December in key markets. Sweet/sour differentials in Europe and the US Gulf Coast (USGC) narrowed as outright prices from light sweet Brent fell markedly compared with sour grades. However, the spread widened in Asia on strong demand for light sweet crude amid robust margins for low sulphur fuel oil and high desulphurization costs.