Crude Oil recovered to an extent sans record fall, Petrochem market still in the doldrums
- 29-Nov-2021 6:11 PM
- Journalist: Robert Hume
Crude Oil futures recovered on Monday, after measuring record decline on Friday. The sudden fall in both Brent and WTI crude oil prices was caused by the emergence of cases for another covid variant, Omicron, in various regions globally specifically in Southern Africa and Europe. In lieu of that several countries have imposed travel bans and other border controls as part of precautionary measures to contain the spread of cases.
Emergence of new covid variant sent shockwaves in the market where WTI and Brent fall by USD 10.24 per barrel and USD 9.50 per barrel respectively and settled at USD 68.12 per barrel and USD 72.71 per barrel on 26th November 2021. This decline has been termed as the sharpest fall in crude futures since April 2020 when first covid wave shook the world.
Emergence of new variant also impacted the global market sentiment where investors were shaken resulting in major cutbacks in US and Europe equity market. US Dow Jones Industrial average settled with a dip of 2.53 percent, biggest decline in this year. While S&P 500 Chemical Industries Index went down by 2.13 percent.
Specialty material major Celanese measured a dip of 3.06 percent while methanol MNC Methanex lost close to 4 percent in its share value.
Similar trend has been observed in Asia where Japanese Asahi Kasei Corporation and Mitsubishi Chemical Holding corporation declined by 2.17 percent and 1.27 percent, respectively.
Crude oil futures, however, reshifted balance on 29th November 2021 and in early trading WTI gained 4.67 percent and was last assessed at USD 71.33 per barrel while Brent futures increased by 4.08 percent to USD 75.69 per barrel.
As per ChemAnalyst, “this volatility in crude oil frustrates the investors and manufacturers meanwhile demand growth for various petrochemicals have plateaued as market participants globally were skeptical of the current covid situation and wary of the upcoming holiday season. The speculation regarding new variant will also test global supply chains as countries will likely to become more cautious and restrictive disrupting smooth functions across critically important ports in key petrochemical producing countries.