Oil prices slipped more than 1% during the week ending March 12 from investor worries over travel restrictions because of potentially ineffective vaccines ahead of the driving season
International benchmark Brent crude traded at $69.46 at 1100 GMT on Friday, posting a 1.53% decrease from Monday when trade at 0715 GMT registered at $70.54 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $65.85 at the same time on Friday, dropping 1.87% relative to $67.11 a barrel on Monday.
Oil prices started the week continuing their bullish sentiment from last week, as the OPEC+ decision to hold production steady for another month in April tightened supply.
Geopolitical risks also supported the uptrend in prices when Yemen’s Houthi rebels attacked Saudi Arabian oil facilities, resulting in Brent oil hitting a 13-month high at over $71 on Monday.
Nonetheless, the appetite for profit-taking diminished after the American Petroleum Institute (API) announced its estimate of a rise in US oil stocks on Tuesday.
On Thursday, the Energy Information Administration (EIA) revealed a massive build in oil stocks, although gasoline inventories recorded a surprising decline, signaling demand recovery before the start of the driving season.
However, investors are still not confident of a swift economic recovery with the questionable effectiveness of some COVID-19 vaccines and the possibility of more travel restrictions.
Health authorities in some European countries, including Denmark, Norway and Iceland, banned the COVID-19 vaccine developed by AstraZeneca and Oxford University amid reports of severe or fatal blood clots in vaccinated people.
On the other hand, US consumer prices, which measures changes in the price of goods and services from a consumer’s perspective, increased 0.4% in February in line with market expectations, reflecting a more positive outlook for markets and oil prices.
On an annual basis, the Consumer Price Index was up 1.7% in February from the same month in 2020, again in line with market consensus.
Positive forecasts from the EIA and OPEC for the short and long term also exerted upward oil price pressure.
The EIA said in its March Short-Term Energy Outlook that forecasts depend heavily on future production decisions by OPEC+, the responsiveness of US tight oil production to higher oil prices, and the pace of oil demand growth.
OPEC said in its monthly oil report that higher oil demand was expected in the second half of the year in line with expectations of solid economic recovery and the positive impact from vaccination rollouts.
By Sibel Morrow