Oil prices fall again, slipping below $63

SARAJEVO, (Patria) - Oil prices fell on Thursday on international markets below $63 USD, pressured by a jump in gasoline inventories in the United States (US) due to increased refining in refineries and weaker demand compared to the pre-pandemic period.

On the London market, the price of a barrel fell by 32 cents compared to the previous close, to $62.84. On the US market, a barrel was traded at a price 45 cents lower, at $59.32, reports SEEbiz.

Traders focused on the weekly US government inventory report, which showed a decrease in crude oil inventories last week, 3.5 million barrels, but also a jump in gasoline inventories, four million barrels, as refineries increase processing before the summer travel season.

Analysts stated that demand is still weak due to the coronavirus pandemic.

“Domestic gasoline consumption is not crossing the nine million barrels per day mark, which means we are still far from normalization, despite the US being at the forefront of vaccination globally and the economic growth forecast being raised,” PVM analysts stated.

Traders also point to the increase in Russian oil production in the first days of April compared to the average levels in March.

They were also troubled by increased supply in the negotiations between Iran and a group of Western powers, including the US, on reviving the 2015 nuclear deal, as an agreement could result in the lifting of US sanctions on the Iranian energy sector and the resumption of Iranian oil exports.

A counterweight to the problem of increased supply was the International Monetary Fund's (IMF) estimate that public spending to mitigate the consequences of the COVID-19 pandemic could boost global growth this year to six percent, which would also mean increased demand for oil and its products.

ANZ Research estimates that the price of a barrel on the London market could reach around $75 in the third quarter.

Separately, the Organization of the Petroleum Exporting Countries (OPEC) announced on its website that the price of a barrel of its member countries' reference oil basket was $60.89 on Wednesday, meaning it fell by 44 cents compared to the previous trading day.