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Oil prices stable on confidence in demand recovery

imageCommodities2 hours ago (May 17, 2021 05:37AM ET)

(C) Reuters. FILE PHOTO: An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

By Bozorgmehr Sharafedin

LONDON (Reuters) -Oil prices were little changed on Monday, trading in a tight range as European economic reopenings offset gloom from surging COVID-19 cases in Asia, fresh restrictions and underwhelming Chinese manufacturing data.

Brent crude slipped 1 cent, or less than 0.1%, to $68.70 a barrel at 0908 GMT, and West Texas Intermediate (WTI) crude edged down by a similar amount to $65.36.

Both contracts have risen more than 30% since the start of the year, and Brent remains close to the key $70-a-barrel threshold.

“The fact that prices remained relatively stable during this rather turbulent five-day period indicates that the confidence in a healthy oil market remains intact and unless something unpredictably negative occurs any downside potential will be limited,” said PVM Oil analyst Tamas Varga.

The British economy reopened on Monday, giving 65 million people a measure of freedom after the gloom of a four-month COVID-19 lockdown.

The promise of strong economic growth has kept oil prices high in recent weeks, although the pace of inflation has kept many investors concerned about the possible rise of interest rates and fall of consumer spending.

Investors also remained cautious on worries that the highly transmissible coronavirus variant first detected in India is spreading to other countries.

Some Indian states said on Sunday they would extend COVID-19 lockdowns to help contain the pandemic, which has killed more than 270,000 people in the country.

Singapore is preparing to close schools this week, meanwhile Japan has declared a state of emergency in three more prefectures to contain outbreaks.

Disappointing economic data from China also added to pressure.

China’s factories slowed their output growth in April and retail sales significantly missed expectations as officials warned of new problems affecting the recovery in the world’s second-largest economy.

China’s crude oil throughput rose 7.5% in April from the same month a year ago, but remained off the peak seen in the last quarter of 2020.

“With growing concerns over the spreading pandemic in Asia, Brent prices are expected to stay in a trading range this week,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

Meanwhile, gasoline shortages that have plagued the U.S. East Coast slowly eased on Sunday, with 1,000 more stations receiving supplies as Colonial Pipeline’s 5,500-mile (8,900-km) system recovered from a crippling cyberattack.

U.S. energy firms added oil and natural gas rigs for a third week in a row as higher crude prices prompt some drillers to return to the wellpad, energy services firm Baker Hughes Co said on Friday.

Oil prices stable on confidence in demand recovery

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