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# Oil prices see mixed trading, though oil demand concerns prevail

#
Oil prices see mixed trading, though oil demand concerns prevail

Oil prices traded on a mixed note Thursday, with U.S. prices down but the global benchmark moving higher, as traders weighed prospects for energy demand on the back of the rise in global cases of COVID-19.

Some analysts also said the bigger-than-expected weekly increase in U.S. gasoline stocks, which contributed to losses for futures prices of the fuel on Wednesday, was also to blame for the weakness in oil Thursday.

The Energy Information Administration on Wednesday reported that gasoline supply was up by 4 million barrels, while distillate stockpiles climbed 1.5 million barrels for the week. IHS Markit had forecast weekly supply increases of 200,000 barrels for gasoline and 500,000 barrels for distillates.

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“Seeing US gasoline stocks rising by 4 million barrels last week caused some wows on trading floors as a boost in gasoline demand was expected due to Easter holiday mobility,” wrote Bjørnar Tonhaugen, head of oil markets at Rystad Energy, in a daily note.  

“A huge build in road fuel stocks is not what the market was expecting and concerns over the speed of the oil demand recovery resurfaced, leaving traders wondering how stable road fuel usage actually is,” the analyst wrote.

West Texas Intermediate crude for May delivery
CL.1,
-0.05%

CLK21,
-0.05%
CL.1,
-0.05%
was off 10 cents, or 0.2%, to trade at $59.67 a barrel on the New York Mercantile Exchange, following a 0.7% gain on Wednesday.

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June Brent crude
BRNM21,
+0.11%

BRN00,
+0.11%,
 the global benchmark, edged up by 12 cents, or 0.2%, to trade at $63.28 a barrel on ICE Futures Europe after the contract rose 0.7% a day ago.

Oil prices ended slightly higher on Wednesday after an initial retreat in values but investors may be rethinking the state of inventories and demand.

Not everyone is sold on the notion that the increase in gasoline supplies bodes ill for overall energy demand because a rise in gasoline stocks could also be linked to increased utilization in oil refineries, experts say.

Prices for May gasoline futures
RBK21,
+0.61%
were up 0.6% at $1.96 a gallon Thursday, after posting a loss of 0.7% in the previous session. May heating oil
HOK21,
+0.18%
tacked on nearly 0.1% to $1.81 a gallon.

Meanwhile, Tonhaugen said that concerns about the efficacy of AstraZenca in helping achieve a greater economic reopening in Europe may also be weighing on energy markets.

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Spain and Italy have said they are limiting the use of AstraZeneca’s AZN COVID-19 vaccine due to fears of very rare cases of blood clotting issues in adults. On Wednesday, the European Medicines Agency (EMA) said it found a possible link between the vaccine and clotting.

The decision to restrict the use of the shot comes after Germany and France took similar measures. The restrictions could make it harder for the European Union to achieve its target of vaccinating 70% of its adult population by the end of the summer, some fear.

“Europe is a prime user of the AstraZeneca vaccine and any delays or pauses in the vaccination campaigns could partly postpone the oil demand recovery in the continent,” Tonhaugen said.

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That follows a decision earlier this month by major oil producers, known as OPEC+, who agreed to begin easing oil production curbs in May.

That “continues to add downside risk,” said Robbie Faster, manager, global research and analytics at Schneider Electric. “That risk has also been reinforced amid reports that the U.S. and Iran continue to engage in preliminary negotiations that could eventually allow Iranian exports to return to the global market.”

Also on Nymex Thursday, natural-gas futures traded little changed, with the May contract
NGK21,
-0.04%
up nearly 0.1% at $2.52 per million British thermal units.

The U.S. Energy Information Administration reported on Thursday that domestic supplies of natural gas rose by 20 billion cubic feet for the week ended April 2. That compares with an average increase of 27 billion cubic feet forecast by analysts polled by S&P Global Platts.

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