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Oil set for 20 percent drop in 2020 as lockdowns weigh, market eyes more stimulus

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Global crude oil markets have lost about a fifth of their value in 2020 as strict coronavirus lockdowns paralyzed much of the global economy, but prices have rebounded strongly from their lows as governments rolled out stimulus.

On Thursday, the last trading day of 2020, Brent was down 8 cents, or 0.2 percent, at $51.55 a barrel as of 1015 GMT, while US West Texas Intermediate lost 10 cents, or 0.2 percent, to $48.30 a barrel.

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“It is kind of year-end quiet, but a weaker dollar is helping keep a floor under markets,” said Stephen Innes, chief global market strategist at Axi.

Brent and WTI have more than doubled from decade lows seen in April, putting past a year which marked the first negative prices for WTI that shocked investors globally.

Asian shares edged up on Thursday and were set to end a tumultuous 2020 at record highs.

The dollar was ending the year in a downward spiral, with investors putting more money into riskier assets and as the US printed more money to fund its swelling budget and trade deficits.

Global commodity markets are poised to end 2020 on a strong note, with recovering demand and widespread stimulus packages buoying prices.

Roll-outs of vaccines to combat the virus and trillions of dollars’ worth of fiscal support are expected to boost investment and spending in 2021.

In the short term, concerns over coronavirus lockdowns are likely to cap gains.

A new variant of the virus in Britain has led to the reimposition of restrictions on movements, hitting near-term oil demand and weighing on prices, while hospitalizations and infections have surged in parts of Europe and Africa.

On the supply front, US energy firms recorded the best quarter for boosting the rig count since the second quarter of 2017, according to data from Baker Hughes.

The next major oil price driver will be a January 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, which will debate the need to further boost output from February.

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