Oil prices extended Tuesday’s losses on profit taking and a stronger US dollar, but general optimism about the recovery in demand kept prices low.
Brent crude was down 37 cents, or 0.5%, at $ 71.12 a barrel at 1:35 p.m. GMT, after falling 0.6% on Monday. US West Texas Intermediate oil fell 27 cents, or 0.4%, to $ 68.96 a barrel, after falling 0.6% in the previous session.
“A previous surge in prices that was likely premature, coupled with a stronger US dollar and a correction in equity markets, are weighing on oil prices,” Commerzbank said.
Since the price of oil is in dollars, a stronger greenback makes crude more expensive for buyers with other currencies.
Data showing that China’s crude imports were down 14.6% in May on an annual basis also weighed on prices.
“China was profiting from low oil prices a year ago, so the base is unusually high,” noted oil broker PVM.
Heavy maintenance at Chinese refineries in May also contributed to the decline.
Crude prices have risen in recent weeks, with Brent rising nearly 40% this year and WTI gaining even more, amid a return to demand as some countries successfully vaccinate populations against COVID-19 .
Supply restriction by the Organization of the Petroleum Exporting Countries and its allies has also helped to support prices.
“The underlying environment in the oil market remains favorable: demand for fuel is picking up sharply not only in the United States, but also in Europe following the (partial) lifting of restrictions,” Commerzbank said.
In Britain, one of the most vaccinated countries in the world, it is now doubtful that the country will lift all coronavirus restrictions as previously planned on June 21.
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