Oil’s record start to 2021 was under pressure from a firming dollar and a selloff in bond markets that spooked investors in risky assets.

Brent in London fell at the end of a week that saw the steepest decline in the Nasdaq 100 since the pandemic meltdown. Yet the global benchmark crude has had its best ever start to a year as supplies tighten and pockets of demand return. Next week, the Organization of Petroleum Exporting Countries and its allies meet to decide on output levels, with market gauges indicating strength.

The demand outlook has improved, with traders and investment banks this week making a series of bullish calls and upward price revisions. The recent big freeze that halted millions of barrels of U.S. output has exacerbated the tightening, and supply scarcity may worsen in the coming months as North Sea fields undergo major maintenance.

Meanwhile, the market is facing an escalation in Middle East tensions after the U.S. carried out airstrikes in Syria on sites connected to Iran-backed groups.

“No doubt the crude oil market is undersupplied and tight,” said Helge Andre Martinsen, an oil analyst at DNB Bank ASA. But given this week’s bond-market selloff, “the macro and liquidity trends are so strong and dominating that a shift will clearly impact all markets, including oil.”


  • Brent for April settlement, which expires on Friday, lost 1.7 per cent to US$65.74 a barrel at 1:09 p.m. in London
  • West Texas Intermediate for April delivery fell 2.6 per cent to US$61.91

Soaring bond yields on Thursday were the latest sign that accelerating inflation could trigger a pullback in monetary policy support that has helped fuel gains in risky assets during the pandemic. It could have ripple effects across commodity markets.

Other oil-market news:

  • Exports of five key North Sea crudes -- Brent, Forties, Ekofisk, Oseberg and Troll -- will slump to a five-month low of 780,000 barrels a day in April, while bigger declines in shipments may be in store because of work in June on the Forties Pipeline System.
  • China’s oil stockpiles have risen to around 100 days’ worth of net imports, making it challenging to find extra storage tanks and facilities to hold supplies, two people familiar with the matter said.
  • The overhaul of a vital oil benchmark drew stiff objection from the exchange that hosts the world’s main international crude futures contract.
  • To see the gulf between China’s ambitious carbon-neutral goals and the desire of its companies to maintain breakneck growth, look at Shandong’s oil refineries.

--With assistance from David Stringer.