Oil prices on Thursday declined on uncertainties over the success of the coronavirus vaccines and despite a fall in US crude oil stocks.
International benchmark Brent crude was trading at $61.14 per barrel at 0655 GMT for a 0.53% decrease after closing Wednesday at $61.47 a barrel.
American benchmark West Texas Intermediate (WTI) was at $58.36 a barrel at the same time for a 0.54% fall after ending the previous session at $58.68 per barrel.
Although the immediate success of the vaccine rollouts engendered hope for economic and oil demand recovery, according to energy and finance experts, a full recovery will not be achievable in the short term.
While a certain degree of vaccine effectiveness has been reached, an immunity level sufficient to stop the pandemic is still in question. Some experts have also cast doubt over the pace of the vaccination campaigns to achieve prompt global economic growth and a rebound in oil demand.
US Federal Reserve Chairman Jerome Powell said the employment picture is “a long way” from where it needs to be.
“Despite the surprising speed of recovery early on, we are still very far from a strong labor market whose benefits are broadly shared,” Powell said.
Negative outlooks for the second half of the year also put pressure on oil prices.
In its February Short-Term Energy Outlook (STEO), the country's Energy Information Administration (EIA) said it expects lower oil prices later in 2021 as a result of higher oil supply, which would slow the pace of global oil inventory withdrawals. It also forecasts that high global oil inventory levels and spare production capacity will limit upward price pressures.
Limiting further declines, US crude oil inventories declined last week to their lowest level since March of last year, signaling an uptick in crude demand in the US, the world's largest oil consumer.
US commercial crude oil inventories fell by 6.6 million barrels, or 1.4%, to 469 million barrels, relative to the market expectation of a build of 1.34 million barrels, according to data released by the EIA on Thursday.
By Sibel Morrow