20.05.202111:43 Forex Analysis & Reviews: Insignificant rise in oil prices to hardly offset recent drop

Early on Thursday, oil prices showed growth after a nosedive recorded on Wednesday.

Thus, Brent futures for July delivery added 0.23% to settle at $66.81 per barrel, whereas WTI futures for July delivery advanced by 0.36% to $63.58 per barrel. June WTI futures increased by 0.58% to $63.73 per barrel.

The rise in oil prices was halted by concerns about the epidemiological situation in some Asian regions. Moreover, market participants continue estimating the possibility of oil supplies from Iran, if it reaches a consensus in the talks with the US.

At the same time, analysts predict a rosy future for the oil market. They foresee that in the second half of 2021, the average price of Brent crude will total $70 per barrel.

However, yesterday, oil prices tumbled to more than a 3-week low.

On Wednesday, June WTI futures lost 3.3% to trade at $63.36 per barrel, whereas Brent futures for July delivery depreciated by 3.0% to $66.66 per barrel.

The nosedive was mainly caused by the epidemiological situation in India, the world's third largest consumer of oil. There, demand for oil is under significant pressure from the uncontrolled spread of the coronavirus.

Experts fear that India may repeat the US scenario, when the coronavirus pandemic led to the zero consumption of petrol and a slump in energy demand.

Investors are also focused on the Iranian issue. Thus, in the near future, the US administration may revive the talks over the nuclear agreement and soften sanctions against Iran. This will allow the country to increase its oil exports.

At the same time, yesterday, the US Energy Information Administration reported that oil reserves in the US advanced by 1.3 million barrels during the previous week. Analysts had forecast a decline of 2.9 million barrels. On Tuesday, The American Petroleum Institute (API) reported on a rise of 0.6 million barrels in oil reserves.

At the same time, petrol inventories shrank by 2 million barrels and those of distillates declined by 2.3 million barrels. Analysts had expected a rise of 0.6 million barrels in petrol reserves and a drop of 0.2 million barrels in distillates reserves.

Last week, the overall supply of commercial motor gasoline totaled 9.244 million barrels a day. This is the highest level since March 2020. Notably, this record high was reached before the coronavirus outbreak. Analysts suppose that such figures could be considered as a sign of further rise in oil demand.

Analysts also emphasize that this week, the oil market has been almost ignoring positive data. It has been mainly influenced by the news about the Iranian nuclear program.

In 2021, oil prices have been rising amid higher demand and lower supply. Oil is also supported by the economies, which are recovering after the Covid-19 pandemic. Despite this fact, quotes of many commodities, which earlier, were gaining in value, now, are sliding. For example, lumber futures declined for the seventh session in a row.