MELBOURNE (Reuters) – Oil prices fell on Friday but were set for their third weekly hike on expectations of a recovery in fuel demand in Europe, China and the United States, with rising vaccination rates leading to a relaxation of pandemic brakes.
Brent crude futures fell 23 cents, or 0.3%, to $ 72.29 a barrel at 1:45 a.m. GMT, reversing most of Thursday’s rise to its highest close since May 2019.
US West Texas Intermediate (WTI) crude futures slipped 22 cents, or 0.3%, to $ 70.07 a barrel, after climbing 0.5% on Thursday to their highest level in October 2018.
Brent is expected to gain 0.5% this week while WTI is expected to rise 0.6%.
“If you look at the week, we’ve certainly seen prices rise on some demand hopes, but it was mixed,” said Vivek Dhar, Commonwealth Bank commodities analyst.
“The data on US stocks did not give a good picture. We’ve seen the gasoline and distillate stocks really go up. Towards the end of the week it was a drag on morale, ”he said.
The United States Energy Information Administration reported on Wednesday that gasoline inventories increased by 7 million barrels in the week to June 4 and that distillate inventories increased by 4.4 million barrels, both far more than analysts expected. [EIA/S]
However, data showing road traffic returned to pre-COVID-19 levels in North America and most of Europe was encouraging, analysts from ANZ Research said in a note.
“Even the jet fuel market is showing signs of improvement, with flights in Europe increasing 17% in the past two weeks, according to Eurocontrol,” ANZ analysts said.
The Organization of the Petroleum Exporting Countries (OPEC) reinforced the view of healthy demand, sticking to its forecast that demand in 2021 would increase by 5.95 million barrels per day, up from 6.6% compared to the previous year.
“Overall, the recovery in global economic growth, and therefore in oil demand, is expected to accelerate in the second half of the year,” OPEC said in its monthly report.
Reporting by Sonali Paul; Edited by Christian Schmollinger