Crude extends losses but mood remains bullish

London — Oil prices extended losses on Tuesday on profit-taking and a stronger US dollar, but overall optimism about a recovery in demand kept a floor under prices.

Brent crude was down 35c, or 0.5%, at $71.14/bbl by 9.21am GMT, after declining 0.6% on Monday. US oil was 32c, or 0.5%, weaker at $68.91/bbl after dropping 0.6% in the previous session.

“A previous price surge that was probably premature, coupled with a stronger US dollar and a correction on the stock markets, are weighing on oil prices,” Commerzbank said.

A stronger greenback makes crude more expensive for buyers with other currencies. Also weighing on prices was data showing China’s crude imports were down 14.6% year on year in May.

“This deficit, however, is delusive because China was taking advantage of low oil prices a year ago, so the base is uncharacteristically high,” oil brokerage PVM said.

Heavy Chinese refinery maintenance in May also contributed to the decline.

Crude prices have risen in recent weeks, with Brent up nearly 40% this year and WTI gaining even more, amid expectations of demand returning as some countries succeed in vaccinating populations against Covid-19.

Restraint on supply by the Opec and its allies has also helped buttress prices.

“The fundamental environment on the oil market remains favourable: fuel demand is recovering strongly not only in the US, but also in Europe following the [partial] lifting of restrictions,” Commerzbank said.

In the UK, one of the most vaccinated countries in the world, there are now doubts that the country will lift all coronavirus-related restrictions on June 21 as previously planned.