Slow start to US driving season dents oil prices
Petrol stocks have surged on weaker-than-expected demand
Singapore — Oil prices fell on Thursday as inventory data in the US, the world’s top oil consumer, showed a surge in petrol stocks that indicates weaker-than-expected fuel demand at the start of summer, the country’s peak driving season.
Brent crude oil futures were down 55 US cents, or 0.8%, at $71.67 a barrel by 3.41 GMT, while US oil futures declined by 53c, or 0.8%, at $69.43 a barrel.
"Markets had been optimistic on demand as the US enters the peak summer driving season," analysts from ANZ Research said in a note on Thursday.
"An acceleration in [coronavirus] vaccinations and rising traffic numbers are a plus for demand for transportation fuel. However, this data highlights it won’t be a smooth road back to recovery."
US crude oil stockpiles that include the Strategic Petroleum Reserve (SPR) fell for the 11th straight week as refiners ramped up output, but fuel inventories grew sharply due to weak consumer demand, the Energy Information Administration (EIA) said on Wednesday.
Crude inventories that exclude the SPR fell by 5.2-million barrels in the week to June 4 to 474-million barrels, the third consecutive weekly drop. But fuel stocks were up sharply, with product supplied falling to 17.7-million barrels per day (bpd) vs 19.1-million the week before.
Gasoline demand fell to 8.48-million bpd in the week to June 4, down from 9.15-million bpd from the week before, but up from 7.9-million bpd a year ago, EIA data showed.
In another development weighing on prices, Libya’s Waha Oil aims to return to normal output operations on Thursday after fixing a leak on a pipeline that more than halved the company’s oil production, an oil source at the Es Sider crude export terminal said.
In India, the world’s third-largest oil consumer, fuel demand slumped in May to its lowest since August 2020, with a second Covid-19 wave stalling mobility and muting economic activity in the world’s third-largest oil consumer.
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