Oil edges higher, but posts 20% annual drop in tumultuous 2020

NEW YORK: Global crude prices edged higher on Thursday but lost more than a fifth of their value in 2020, as lockdowns to combat the novel coronavirus depressed economic activity and sent oil markets reeling.

Still, Brent and U.S. crude benchmarks have more than doubled from April’s nadir as producers cut output to match weaker demand. News of coronavirus vaccine distributions also bolstered prices in the fourth quarter, helping futures recover to the highest in about 10 months.

On the last trading day of 2020, Brent rose 17 cents to settle at $51.80 a barrel. U.S. West Texas Intermediate rose 12 cents to settle at $48.52 a barrel. Brent fell 21.5% for the year, with WTI falling 20.5%.

Prices for 2020 bottomed in April as fuel demand collapsed due to the COVID-19 pandemic and after a price war between oil giants Saudi Arabia and Russia. WTI plummeted to a record low negative-$40.32 per barrel, while Brent fell to $15.98 barrel, the lowest since 1999.

From there prices drifted higher and took off once vaccine optimism hit the market.

“The first half was remarkable and unprecedented with a steep move lower and a snapback rally,” said John Kilduff, a partner at Again Capital Management in New York. “Then it was like watching paint dry for several months through October.”

Though prices have climbed the last two months, additional lockdowns have weighed again on fuel demand and a new, highly infectious variant of the virus has raised alarms.

A monthly Reuters poll on Thursday showed oil prices are not expected to make much progress in 2021.

And the demand outlook for fuel still remains murky. U.S. gasoline futures fell 17% for the year, while U.S. heating oil futures dropped 27%.

Some commodity markets, including spot Asian LNG and silver, were ending 2020 on a strong note, with recovering demand and widespread stimulus packages buoying prices. Rollouts of vaccines to combat the virus and trillions of dollars’ worth of fiscal support were expected to boost investment and spending in 2021.

U.S. natural gas futures posted their biggest yearly gain since 2016, helped by record liquefied natural gas (LNG) exports.

U.S. stock indexes were set to end 2020 with solid gains.

The next major oil price driver will come Monday as the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, plan to debate boosting crude output from February.