WTI still rangebound between $52.00-low-$53.00s amid ongoing market indecision

• Crude oil markets have largely stuck to this week's ranges on Friday.
• WTI has swung between the $52.00 and just above the $53.00 level.

Crude oil market indecision has continued on the final trading day of the week; front-month WTI futures have very much stuck to the week’s prior established range of between the $52.00 and low-$53.00s. Indeed, this is a range that has persisted for most of the last three weeks.

At present, WTI trades close to the $52.50 mark, relatively flat on the day, with crude oil markets holding up despite downside in global equity markets, as jitters to do with the recent rise in speculative stock market retail trader activity leaves energy markets largely untouched (for now).

Driving the session

Indeed, it seems likely that while equity market traders fret about the crazy price action being seen in the likes of GameStop and other small-cap popular hedge fund shorted stock prices, energy markets are deriving some support from recent positive news regarding vaccinations; Novavax and Johnson & Johnson both released positive results for their final stage clinical trials. That means two more viable vaccine candidates to further accelerate the global vaccination effort, which, in fairness, has faced some setbacks in recent weeks amid production issues being reported by Pfizer, AstraZeneca and Moderna (affecting the European Union particularly badly).

Balancing act

Rangebound market conditions over the past three weeks are perhaps unsurprising given recent negative developments that have taken the wind out of the sales of the bullish narrative that had launched WTI prices nearly 50% higher in since the start of Q4 2020 from the mid-$30s to current levels above $50.

As a recap, the major factors boosting crude oil markets at the end of 2020 were; 1) positive vaccine news (providing a massive boost to the prospect for a demand recovery in 2021), 2) victory in the US Presidential election for Joe Biden (meaning a likely return to “normality” in terms of global trade, which is beneficial to global growth, and the likelihood of tougher regulations on US crude oil production) and 3) continued OPEC+ output cut flexibility, coupled with voluntary Saudi Arabian output cuts.

Whilst this bullish narrative has not sustained material damaged, it has faced hurdles; a global acceleration in the spread of the virus in wake of Christmas celebrations, the spread of new, more vaccine-resistant virus strains, vaccine production delays and new international travel restrictions have resulted in the World Bank, IMF and government downgrading global growth expectations and has delivered a blow to near-term crude oil demand prospects. Perhaps the only thing holding crude oil markets above the $50 mark is the 1M barrels per day in additional voluntary output cuts announced by the Saudi Arabians to last until April, which is keeping the market sufficiently tight.