Oil prices stagnate at $35 per barrel

SARAJEVO, (Patria) - Oil prices held at $35 on Monday in thin international trade, as renewed concerns about demand recovery during the coronavirus crisis neutralized the impact of limited supply.

In London, the price of a barrel in electronic trading was unchanged from the previous close at $35.08. The London market was closed for the holiday, SEEbiz reports.

In electronic trading in the US market, it rose by 14 cents to $33.39. US markets were closed for Memorial Day.

The focus was on concerns about demand during the coronavirus pandemic, which forced governments around the world to suspend travel and economic activity.

Governments have since begun to ease measures, but the pace of demand recovery remains uncertain.

"The uncertainty surrounding current travel patterns in the United States (US) is so great that the American Automobile Association has not released its usual Memorial Day travel forecast," said Bjornar Tonhaugen of Rystad Energy.

Concerns about demand are also fueled by increased tension between the US and China, the world's two largest oil consumers, over China's announcement of a security law in Hong Kong.

The announcement followed a series of contentious issues in the relationship between the two countries, including the spread of the coronavirus, Hong Kong, human rights, trade, and, according to the Chinese, US support for Taiwan.

Prices are supported by limited supply from leading producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia. It has been a month since the agreement to cut OPEC+ production by 9.7 million barrels per day came into effect.

US producers are also cutting production, as shown by data from energy services company Baker Hughes that the number of active drilling rigs decreased by 21 last week, to a record low of 318.

"The significant drop in global oil production has undoubtedly been a key factor in the recent surge in oil prices," Commerzbank concluded.

OPEC did not announce the price of a barrel of its reference oil basket on Friday due to a religious holiday in the Islamic world.