Oil Drops Below $63 After Jumping on Stellar U.S. Demand Data

Apr 15, 2021
(Bloomberg)

Oil eased, cooling some of a rally that pushed prices up by almost 5% on Wednesday.Futures in New York traded near $63 a barrel on the back of the longest run of gains in more than a month.

Signs of a stronger U.S. market are abounding. The number of miles driven on U.S. interstates rose versus the same period in 2019 for the first time since the pandemic began. U.S. crude inventories dropped the most in almost two months last week, while a gauge of gasoline demand ticked higher for a seventh straight week.

U.S. crude inventories drop for a third straight week

Oil had been stuck near $60 a barrel after a rally faltered in mid-March amid a resurgence in virus cases in some regions. While the IEA sees a temporary lull in the market due to the renewed outbreaks, it followed OPEC in boosting its demand estimates for this year as the economy rebounds from the pandemic.

“The environment on the oil market remains favorable,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “The picture in the oil market is continuing to brighten despite ongoing restrictions in Europe and India.”

Prices
West Texas Intermediate slipped 33 cents to $62.82 at 10:19 a.m. London time Brent for June settlement fell 31 cents to $66.27

There are reasons to be cautious, however. The pandemic is raging in India, while OPEC and its allies are about to start adding more supplies. Another wildcard is Iran, which is seeking to revive a 2015 nuclear deal and have U.S. sanctions removed to lift crude exports, but progress on that remains uncertain. The demand picture in Europe is also wobbly, with toll road traffic on France the weakest since May last week.

Other oil-market news:
Saudi Arabia’s oil facilities were targeted with drones and missiles for the second time in a week, with Yemen’s Houthi rebels claiming an attack on the south-western refinery town of Jazan. U.S. shale producers risk another oil-price war with OPEC and its allies if they resume the breakneck production growth of the last decade, according to Pioneer Natural Resources Co. West Africa’s oil exports due for loading next month have struggled to sell, due to weak demand from the region’s regular customers in Asia and Europe and tougher competition from rival suppliers.

Other oil-market news:

Saudi Arabia’s oil facilities were targeted with drones and missiles for the second time in a week, with Yemen’s Houthi rebels claiming an attack on the south-western refinery town of Jazan.
U.S. shale producers risk another oil-price war with OPEC and its allies if they resume the breakneck production growth of the last decade, according to Pioneer Natural Resources Co.
West Africa’s oil exports due for loading next month have struggled to sell, due to weak demand from the region’s regular customers in Asia and Europe and tougher competition from rival suppliers.