Oil trims gains as global vaccination rollout lifts demand

Melbourne — Oil prices slipped on Friday but were set for their third weekly rise on expectations for a recovery in fuel demand in Europe, China and the US as rising vaccination rates lead to an easing of pandemic curbs.

Brent crude futures fell 23c, or 0.3%, to $72.29 a barrel at 1.45am GMT, reversing most of Thursday’s climb to its highest close since May 2019.

US West Texas Intermediate (WTI) crude futures slipped 22c, or 0.3%, to $70.07 a barrel, after climbing 0.5% on Thursday to its highest close since October 2018.

Brent is set for a gain of 0.5% this week while WTI is set to climb 0.6%.

“If you take the week, we’ve certainly seen prices lift on some demand hopes, but it was mixed,” said Commonwealth Bank commodities analyst Vivek Dhar.

“The US stockpile data didn’t paint a good picture. We saw petrol and distillate stockpiles really surge. Towards the end of the week that was a dampener on the spirits,” he said.

The US Energy Information Administration reported on Wednesday that petrol inventories rose by 7-million barrels in the week to June 4, and distillate stockpiles rose by 4.4-million barrels, both much more than analysts had expected.

However, data showing road traffic returning to pre-Covid-19 levels in North America and most of Europe was encouraging, ANZ Research analysts said in a note.

“Even the jet fuel market is showing signs of improvement, with flights in Europe rising 17% over the past two weeks, according to Eurocontrol,” the analysts said.

Opec reinforced the view of healthy demand, sticking to its forecast that demand in 2021 would rise by 5.95-million barrels per day, up 6.6% from a year earlier.

“Overall, the recovery in global economic growth, and hence oil demand, are expected to gain momentum in the second half,” Opec said in its monthly report.

Reuters