Oil slipped after touching $70 a barrel in New York for the first time since October 2018 as a rally driven by signs of a tightening market eased.
Futures jumped 5% last week but were unable to rise beyond $70 on Monday. Europe’s cities are as congested as they were in 2019, and the number of passengers passing through security checkpoints in the US continues to climb. Those are the latest signs of an oil demand recovery in the Western world, and overall consumption should remain strong according to BP Plc.
A robust rebound from the virus in the US, China and Europe has driven prices more than 40% higher this year. But the demand recovery has been patchy with the pandemic still surging in parts of Asia. Chinese oil imports, a major reason behind the rally, fell to a five-month low in May as private refiners held back on purchases amid scrutiny of government-issued purchases quotas.
“For many, the $70 per barrel oil signal may be enough for investors to cash out of the bull cycle early — likely what happened — which would stifle the upward price trajectory forecasted by our bullish crude balances,” said Louise Dickson, an analyst at Rystad Energy.
Crude rose by the most since mid-April last week. West Texas Intermediate for July delivery lost 0.3% to $69.44 a barrel in New York. Brent for August fell 0.3% to $71.66. Opec+ appears in control of crude prices, with US production still below pre-pandemic levels, said Mike Muller, Vitol Group’s head of Asia.
The decline in US drilling and output makes Opec+’s job of managing markets easier, Vitol’s Muller said at a conference.
Still, with prices near their highest levels in two-and-a-half years, North Sea oil traders continue to store oil on tankers at sea. About 6 million barrels of benchmark crude oil is now floating, according to ship tracking data compiled by Bloomberg.