Oil extends drop below $58 after IEA cuts 2021 demand forecast
Oil slipped below $58 a barrel after the International Energy Agency cut its demand forecast for this year and as one technical indicator signaled a recent rally may be overdone.
Futures in New York extended declines for a second session on Friday after surging more than 12% in the longest run of gains in two years. The IEA said the re-balancing of the global oil market remains fragile as the pandemic continues to limit travel and economic activity. While the recent rally pushed prices to the highest level in a year, it also sent crude’s 14-day Relative Strength Index firmly into overbought territory.
Oil is still set to eke out a second weekly gain, with the rebound from the depths of the Covid-19 outbreak accelerating this year after Saudi Arabia pledged to deepen output cuts. Prompt timespreads have firmed in a bullish backwardation structure, helping to unwind bloated stockpiles held in onshore tanks and offshore on ships that swelled during the pandemic.
