Oil prices recorded a limited decline on Thursday, putting the black gold in a holding pattern as investors favor lucrative bearish demand signals amid falling US stocks and ahead of the summer driving season.
International benchmark Brent crude was trading at $68.34 per barrel at 0641 GMT for a 0.56% loss after closing Wednesday at $68.73 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $65.86 a barrel at the same time with a 0.52% decrease after ending the previous session at $66.21 per barrel.
Oil prices have been fluctuating between $68 and $70 for a while, as investor caution is overshadowing positive short-term signals.
The recent negotiations between the US and Iran to revive the 2015 nuclear agreement and lift Iranian oil export sanctions are heightening investor caution over the extra barrels that Iran will bring to the market. However, many analysts agree that “the expected global demand recovery this summer seems strong enough to absorb the effect.”
“Global optimism over the coming strong summer demand is overwhelming and does not seem to allow oil prices to miss out on the future opportunity at the cost of potentially seeing the added Iranian barrels available on the market,” said Rystad Energy’s Oil Markets Analyst Louise Dickson.
Both the Organization of Petroleum Exporting Countries (OPEC) and International Energy Agency (IEA), taking into account US transportation fuel data and the acceleration in vaccination programs in many regions, forecast in their latest oil market reports that oil demand would surge by 6% in 2021, particularly in the second half of the year.
Cementing their forecasts, US crude stocks fell by more than the market expectation last week, signaling a crude demand rebound in the US, the world's largest oil consumer.
US commercial crude oil inventories fell by 1.7 million barrels, or 0.3%, to 484.3 million barrels, relative to the market expectation of a fall of 1.3 million barrels, according to data released by the country's Energy Information Administration (EIA) on Wednesday.
By Sibel Morrow