London — Oil prices fell on Thursday, paring recent gains, as renewed lockdowns and the emergence of new coronavirus variants weighed on the prospects for a swift demand recovery.
Brent crude fell 28c, or 0.5%, to $61.19 a barrel by 9.47am GMT and US West Texas Intermediate (WTI) crude slid 25c, or 0.4%, to $58.43.
The Brent benchmark had risen in the previous nine sessions, its longest sustained period of gains since January 2019. Wednesday had marked the eighth daily gain for US WTI crude.
“Demand recovery is hindered by new virus strains and stuttering rollouts of inoculations,” said PVM Oil analyst Tamas Varga.
The International Energy Agency (IEA) said on Thursday that global oil supply is still outstripping demand because of Covid-19 lockdowns and the spread of new virus variants.
“The forecasts for economic and oil demand growth are highly dependent on progress in distributing and administering vaccines, and the easing of travel restrictions in the world’s major economies,” the IEA said.
The market has been driven higher recently as oil cartel Opec and its allies (Opec+) reduced output and Saudi Arabia pledged additional voluntary cuts. But the IEA said that a rapid stock draw expected in the second half of 2021 could set the stage for Opec+ to start unwinding its cuts.
Further price pressure came from the end of a blockade by Libya’s Petroleum Facilities Guards at the port of Hariga. The stoppage at Hariga began in January and contributed to a decline in Libyan oil output.
However, US crude stockpiles fell last week for a third straight week, dropping by 6.6-million barrels to 469-million barrels, the lowest level since March, the Energy Information Administration said. Analysts in a Reuters poll had forecast an increase of 985,000 barrels.
Yet the continual struggle caused by the emerging variants of the virus and doubts about the efficacy of vaccines continues to dampen sentiment.
A UK scientist said the coronavirus variant found in the British county of Kent is likely “to sweep the world” and could undermine the protection given by vaccines.