Oil prices fell modestly on Thursday morning, and the decline in commodities was attributed, at least in part, to a late reaction to a larger-than-expected rise in U.S. gasoline stocks, suggesting a slack in energy demand. The Energy Information Administration reported Wednesday that gasoline supply increased by 4 million barrels, while distillate reserves rose 1.5 million barrels during the week. IHS Markit had forecast weekly supply increases of 200,000 barrels of gasoline and 500,000 barrels of distillates.
“Seeing US gasoline stocks rise by 4 million barrels last week caused surprise on the trading floors as gasoline demand was expected to surge due to the mobility of the Easter holidays.” wrote Bjørnar Tonhaugen, Rystad Energy’s head of oil markets, in a daily note. “A large build-up of highway fuel stocks is not what the market expected and concerns about the speed of oil demand recovery resurfaced, leaving traders wondering how stable highway fuel use is,” wrote the analyst. West Texas Intermediate crude for May delivery CLK21, -0.38% CL.1, -0.38% was down 47 cents, or 0.8%, to trade at $ 59.30 a barrel on the New York Mercantile Exchange, after a 0.7 gain. % on Wednesday. June 21 Brent BRNM crude, -0.16% BRN00, -0.16%, the global benchmark, lost 18 cents, or 0.3%, to trade at $ 62.98 a barrel on ICE Futures Europe. after the contract rose 0.7% a day ago. Oil prices closed slightly higher on Wednesday after an initial pullback in values, but investors may be reconsidering the state of inventories and demand. Not everyone is sold on the idea that increased gasoline supply bodes ill for overall energy demand because an increase in gasoline stocks could also be related to increased utilization at oil refineries, they say. The experts. However, Tonhaugen said that concerns about AstraZenca’s effectiveness in helping achieve a further economic reopening in Europe may also be affecting energy markets. Spain and Italy have said they are limiting the use of AstraZeneca’s AZN COVID-19 vaccine due to fear of very rare cases of blood clotting problems 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 shooting comes after Germany and France took similar measures. The restrictions could make it harder for the European Union to achieve its goal of vaccinating 70% of its adult population by late summer, some fear. “Europe is one of the main users of the AstraZeneca vaccine and any delay or pause in vaccination campaigns could partly postpone the recovery in oil demand on the continent,” Rystad analysts said.