Oil drop as fuel demand anxieties continue

Oil was falling Tuesday morning in Asia, extending Monday’s declines as the fragile state of the global economic recovery from coronavirus influences the fuel demand outlook.

Brent oil futures dropped 0.77% to $70.94 by 11:38 PM ET (3:38 AM GMT), but remained over the $70-mark. WTI futures were falling 0.74% to $68.72.

Trade data from China increased investor concerns, the world’s top oil importer, published on Monday. Imports rose 51.1% year-on-year in May, under the 51.5% in forecasts made by Investing.com but higher than April’s 43.1% growth.

Investors also expect the outcome of talks within Iran and world powers to restore a 2015 nuclear deal and potentially re-add Iranian crude to the global supply. Discussions will resume in Vienna on Jun. 10.

The black liquid has attended a rally in recent weeks. Brent futures are rising about 40% in the year to date.

Fuel demand optimism increased as some countries saw declining numbers of coronavirus cases and rolled out vaccination programs

Also supporting prices was the Organization of the Petroleum Exporting Countries and partners (OPEC+) ‘s repeated decision to keep supply limited at its meeting earlier in the month.

Nevertheless, the optimism has been discouraged by waves of coronavirus cases in countries such as India, the world’s third-largest oil merchant.

Investors now anticipate crude oil supply data from the American Petroleum Institute, due later in the day.

Oil prices continued their declines on Tuesday as anxieties about the weak state of the global recovery in demand for crude and fuels were raised by data showing China’s oil imports dropped in May.

Brent crude was under 49 cents, or 0.7%, at $71.00 a barrel by 0643 GMT, after dipping 0.6% overnight. U.S. oil was off by 44 cents, or 0.6%, at $68.79 a barrel, falling by 0.6% in the prior session.

China’s crude imports were below 14.6% in May, from a high level a year earlier. Daily arrivals were at the weakest level this year. Maintenance at refineries curbed demand for oil purchases.

Crude prices have increased in recent weeks, with Brent up by almost 40% this year. WTI was gaining more than that, between expectations of demand to return as some countries benefit in vaccinating populations against coronavirus.

Prohibition on supply by the Organization of the Petroleum Exporting Countries and partners has also supported buttress prices.