Oil prices muted despite increased demand for petrol

London — Concerns about renewed coronavirus lockdowns in the US outweighed signs of a recovery in US petrol demand on Thursday to keep a lid on oil prices.

The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of oil cartel Opec and its allies (Opec+).

Brent crude futures were up 5c, or 0.12%, to $43.34 by 11.39am GMT, after gaining 0.5% on Wednesday, while US West Texas Intermediate (WTI) crude futures dipped 14c, or 0.3%, to $40.76, after rising 0.7% the previous day.

“Support will disappear after this week as coronavirus cases are surging in several US states,” Tamas Varga at PVM Oil Associates said, adding that a fall in prices is likely.

Data from the US Energy Information Administration showed US petrol stockpiles fell by 4.8-million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.

But a spike in coronavirus cases across several US states raised the prospect of renewed lockdowns that would likely dent any sustained recovery in fuel demand. That kept the benchmark crude contracts in tight ranges this week, though holding above $40 a barrel.

US petrol demand was falling in areas where lockdowns were being reinstated, though on the East Coast, where coronavirus infections are under control, it was recovering well, Lachlan Shaw, head of commodity research at National Australia Bank, said.

The US reported more than 60,000 new Covid-19 cases on Wednesday, the biggest increase reported by a country in a single day.

Libya, whose ports have been blockaded since January, is trying to resume exports after the state oil firm lifted force majeure at its Es Sider oil terminal on Wednesday. However, a tanker was prevented from entering the port.

Reuters