Oil prices have slipped after US inventory data showed a weaker fuel demand in the country.
Brent crude dropped $0.25 to $35.04 a barrel, while US West Texas Intermediate (WTI) crude was down $0.53 at $33.18 a barrel, Reuters reported.
Both WTI and Brent contracts are set for a fifth weekly gain. These gains are supported by production cuts and optimism about recovery of fuel demand in several countries.
Data from the industry group Energy Information Administration (EIA) highlighted a sharp rise in US crude oil and distillate inventories in the week that ended on 22 May.
OCBC economist Howie Lee was quoted by the news agency as saying: “The rally needs a breather. It has been four weeks of gains and the market needs to buy time for downstream prices to catch up.
“Beyond the short term, the bullish momentum still looks rather intact.”
Despite easing of lockdown restrictions which were put in place to contain the spread of virus across many states, fuel demand looks dim according to analysts.
RBC Capital Markets analyst Christopher Louney said in a note: “Memorial Day weekend did not bring US motorists out in droves like many market bulls were hoping.”
Going forward, traders will focus on the consensus of talks on output cuts between OPEC+ members, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The meeting is scheduled to be held in the second week of next month.
The record output cuts of nearly ten million bpd agreed by the OPEC+ Group for this month and next month started from 1 May.
Saudi Arabia and some OPEC members are planning to extend these output cuts beyond June. They are yet to receive support from Russia to do so.