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Futures Movers: Oil ends mixed, with U.S. prices holding below $60 as demand concerns prevail

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An earlier version of this article misspelled the name of Robbie Fraser, manager global research and analytics at Schneider Electric. The error has been corrected.

Oil prices ended on a mixed note Thursday, with the global crude benchmark slightly higher but U.S. prices down, as traders weighed prospects for energy demand on the back of the rise in global cases of COVID-19.

Some analysts also said the bigger-than-expected weekly increase in U.S. gasoline stocks, which contributed to losses for futures prices of the fuel on Wednesday, was also to blame for the weakness in oil Thursday.

The Energy Information Administration on Wednesday reported that gasoline supply was up by 4 million barrels, while distillate stockpiles climbed 1.5 million barrels for the week. IHS Markit had forecast weekly supply increases of 200,000 barrels for gasoline and 500,000 barrels for distillates.

“Seeing US gasoline stocks rising by 4 million barrels last week caused some wows on trading floors as a boost in gasoline demand was expected due to Easter holiday mobility,” wrote Bjørnar Tonhaugen, head of oil markets at Rystad Energy, in a daily note.  

“A huge build in road fuel stocks is not what the market was expecting and concerns over the speed of the oil demand recovery resurfaced, leaving traders wondering how stable road fuel usage actually is,” the analyst wrote.

West Texas Intermediate crude for May delivery
CL.1,
-0.05%

CLK21,
-0.05%

CL.1,
-0.05%

lost 17 cents, or 0.3%, to settle at $59.60 a barrel on the New York Mercantile Exchange, following a 0.7% gain on Wednesday.

Global benchmark June Brent crude
BRNM21,
+0.11%

BRN00,
+0.11%
,
 however, edged up by 4 cents, or nearly 0.1%, to settle at $63.20 a barrel on ICE Futures Europe after the contract rose 0.7% a day ago.

Oil prices ended slightly higher on Wednesday after an initial retreat in values but investors may be rethinking the state of inventories and demand.

Not everyone was sold on the notion that the increase in gasoline supplies bodes ill for overall energy demand because a rise in gasoline stocks could also be linked to increased utilization in oil refineries, experts say.

Prices for May gasoline futures
RBK21,
+0.57%

climbed 0.4% at $1.96 a gallon Thursday, after posting a loss of 0.7% in the previous session. May heating oil
HOK21,
+0.18%

tacked on 0.1% to $1.81 a gallon.

Meanwhile, Tonhaugen said that concerns about the efficacy of AstraZenca in helping achieve a greater economic reopening in Europe may also be weighing on energy markets.

Spain and Italy have said they are limiting the use of AstraZeneca’s AZN COVID-19 vaccine due to fears of very rare cases of blood clotting issues in adults. On Wednesday, the European Medicines Agency (EMA) said it found a possible link between the vaccine and clotting.

The decision to restrict the use of the shot comes after Germany and France took similar measures. The restrictions could make it harder for the European Union to achieve its target of vaccinating 70% of its adult population by the end of the summer, some fear.

“Europe is a prime user of the AstraZeneca vaccine and any delays or pauses in the vaccination campaigns could partly postpone the oil demand recovery in the continent,” Tonhaugen said.

Those developments follow a decision earlier this month by major oil producers, known as OPEC+, who agreed to begin easing oil production curbs in May.

That “continues to add downside risk,” said Robbie Fraser, manager, global research and analytics at Schneider Electric. “That risk has also been reinforced amid reports that the U.S. and Iran continue to engage in preliminary negotiations that could eventually allow Iranian exports to return to the global market.”

Also on Nymex Thursday, natural-gas futures settled little changed, with the May contract
NGK21,

up nearly 0.1% at $2.52 per million British thermal units.

The EIA reported on Thursday that domestic supplies of natural gas rose by 20 billion cubic feet for the week ended April 2. That compares with an average increase of 27 billion cubic feet forecast by analysts polled by S&P Global Platts.

Hurricane researchers at Colorado State University on Thursday forecast an “above-normal” Atlantic basin hurricane season this year, which runs from June 1 to Nov. 30. It predicts 14 named storms, with eight of those are forecast to become hurricanes and four of those potentially reaching major hurricane strength, the researchers said. Storms can disrupt energy production and refinery activity in the region.

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