Oil prices extended their losses on Tuesday, as Chinese data that revealed a drop in the country’s imports of crude in May highlighted concern about the fragility of the global recovery in demand for crude and fuel.
Brent crude was down 49 cents, or 0.7%, at $71 a barrel by 0643 GMT, after losing 0.6% overnight.
US crude fell 44 cents, or 0.6%, to $68.79 a barrel, after losing 0.6% in the previous session.
“China’s oil imports are at a five-month low… trending to underscore weakness in the Asian market,” said Bob Yauger, director of energy futures at Mizuho Securities.
Chinese crude imports fell 14.6% in May from a high level a year ago, and daily shipments were the lowest this year, as maintenance work in the ranks limited demand for crude purchases.
Crude prices rose in recent weeks, Brent increased about 40%, and US West Texas Intermediate crude advanced more than that, in light of expectations that demand would return thanks to the success of some countries in vaccination campaigns for their citizens to prevent Covid-19.
OPEC Secretary-General Muhammad Barkindo said today that OPEC and its allies expect a further decrease in oil stocks in the coming months, indicating the success of producers’ efforts to support the market.
Barkindo added, during his online participation in an oil summit, on Monday, that oil stocks in the developed countries fell by 6.9 million barrels in April 2021, a decrease of 160 million barrels from the same period a year ago, which is the first announcement of this figure.
He noted that “further declines are expected in the coming months.”
In April 2021, OPEC and its allies, which is known as the “OPEC +” group, decided to return 2.1 million barrels per day to the market from May to July of this year. Producers adhered to this decision at a meeting last week, which pushed crude prices higher.
“The market has continued to react positively to the decisions we took, including the upward revision of production levels beginning in May of this year,” Barkindo said.
He pointed out that vaccination campaigns and “massive fiscal stimulus” contributed to the optimistic expectations, but added that the discrepancy in the availability of the vaccine globally, the high inflation rate and the continued outbreak of Covid-19 represent continuous risks to the demand for crude.
Gold fell on Tuesday as the dollar rose, while investors cautiously awaited economic data due this week to assess inflation pressures and the US Federal Reserve’s stance on monetary policy.
And gold fell in spot trading 0.1% to $ 1896.94 an ounce (an ounce) by 0505 GMT, while gold settled in futures trading in the United States at $ 1899.10.
The dollar index rose 0.1% against its rivals, increasing the cost of gold to holders of other currencies.
“Inflation has been on the rise in recent weeks, and traders are waiting for confirmation from US data this week that price levels continue to rise,” said Margaret Yang, an analyst at the Daily Fix, referring to Thursday’s US consumer price report.
“(US data) is expected to have a mixed effect on gold. On the positive side, gold is considered as a hedge against inflation so higher numbers increase the attractiveness of gold,” she said, adding that higher inflation would raise concerns about the Fed easing loose monetary policy.
In terms of other precious metals, silver fell 0.3% to $ 27.78 an ounce, and palladium gained 0.2% to $ 2838.28, while palladium fell 0.5% to $ 1167.18.