By Sonali Paul and Koustav Samanta SINGAPORE (Reuters) – Oil prices fell on Friday as a collapse in bond prices generated gains in the US dollar and expectations grew that, with oil prices down again, above pre-pandemic levels, supply is likely to increase again. The market. US West Texas Intermediate (WTI) crude futures fell 72 cents, or 1.1%, to $ 62.81 a barrel at 0516 GMT, giving up all gains on Thursday. April futures, which expires on Friday, fell 63 cents, or 0.9%, to $ 66.25 a barrel, following a loss of 16 cents on Thursday. The most active contract for May was down 77 cents, or 1.2%, at $ 65.34 a barrel. “Crude oil retreated modestly from recent highs amid ‘risk absent’ sentiment as Asia-Pacific stocks fell widely following a bitter Wall Street lead,” said Margaret Yang, strategist at DailyFX, based in Singapore. The sell-off in bond markets, leading to a stronger US dollar and higher yields, is hitting underperforming commodities, he added. A stronger dollar increases the price of oil in US dollars for those who buy crude in other currencies. Despite falling prices on Friday, both Brent and WTI are on track to turn nearly 20% gains this month as markets have faced supply disruptions in the United States, while optimism has been built for demand to improve with vaccine launches. Investors are betting that next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together dubbed OPEC +, will result in more supply returning to the market. “The stakes this time around are particularly high (for OPEC +) as oil prices have more than recovered to pre-pandemic levels, global inventories continue to trend downward and vaccine launches they are accelerating, “said Lachlan Shaw, Australian National. Head of Bank Commodity Research (OTC :). “The market is probably right to think at this price level and given what the fundamentals are doing, there will be more supply coming into the market over time.” Prices are also facing headwinds from the loss of demand from refineries after several facilities on the Gulf Coast were closed during the winter storm last week. The capacity of around 4 million barrels per day is still closed and it may take until March 5 for all closed capacity to resume, although there is a risk of delays, analysts at JP Morgan said in a note this week.
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