SINGAPORE: Oil prices slipped on Friday, taking a breather after touching their highest in six weeks as economic recovery and bullish summer fuel demand outlook outweighed concerns of wider lockdowns in India and Brazil to curb COVID-19 pandemic.
Brent crude fell 26 cents, or 0.4 per cent, to $68.30 a barrel by 0041 GMT, the last day’s trading for the front-month June contract. U.S. West Texas Intermediate crude for June was at $64.73 a barrel, down 28 cents, or 0.4 per cent.
Brent is on track to rise roughly 8 per cent in April while WTI could see gains of nearly 10 per cent. The increases in April will be the fifth monthly gains in six months as global demand has almost returned to pre-pandemic levels on the back of fiscal stimulus while production cuts from OPEC and their allies including Russia eased crude oil oversupply.
Wider adoption of COVID-19 vaccinations is also restoring confidence in travel, lifting oil demand.
Several U.S. cities are emerging from lockdown stoking confidence of stronger demand in gasoline ahead of the key U.S. summer driving season, ANZ analysts said, while UK road fuel sales are nearing last summer’s levels.
The upcoming Labour Day holiday in China would also boost fuel demand at the world’s second largest oil consumer.
“This renewed optimism is overshadowing headwinds in India, where a second wave of infections of COVID-19 are resulting in new travel restrictions being put in place,” ANZ said in a note.
The world’s second most populous nation is in deep crisis, with hospitals and morgues overwhelmed, as the number of COVID-19 cases topped 18 million on Thursday.
On Friday, a private sector survey showed that Japan’s factory activity expanded in April at the fastest pace since early 2018 on a global demand recovery though new coronavirus curbs cast a shadow over the overall economic outlook.