Oil prices fall amid demand concerns
Premium- Weighing on crude are demand concerns amid disappointing US economic data and persisting virus risks in China
NEW DELHI: Crude oil prices declined on Thursday due to demand concerns in the US.
Around 1130 am, the September contract of Brent on the Intercontinental Exchange was at $106.30 per barrel, down 0.58% from previous close. The September contract of West Texas Intermediate (WTI) fell 1.88% to $102.26 per barrel on NYMEX.
According to data, supply of gasoline in the US was about 8.5 million barrels per day last week, around 7.6% lower on year, indicating a fall in demand. Further, rise in gasoline inventory also weighed on prices. Last week, US gasoline stockpiles rose 3.5 million barrels.
Ravindra Rao, head of commodity research at Kotak Securities, said, “Crude trades lower weighed down by mixed inventory report which noted an unexpected decline in US crude oil stocks but also a sharp rise in gasoline stocks reflecting weaker demand despite ongoing summer driving season."
“Also weighing on crude are demand concerns amid disappointing US economic data and persisting virus risks in China. Supply concerns have, however, kept prices supported. Crude rallied sharply in last few days however with mixed inventory report, demand concerns and shaky risk sentiment, we expect to see some correction," he said.
The fall in crude prices comes as a relief for India as the country imports 85% of its energy requirements. Given the fall in global prices, the central government on Wednesday reduced windfall tax on crude oil imposed at the beginning of this month by about 27% to ₹17,000 a tonne. It also withdrew an export tax on petrol and lowered the same on diesel and jet fuel.
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Domestic retail fuel prices have largely remained unchanged for about two months now. In the national capital, petrol is sold for ₹96.72 and diesel is priced at ₹89.62 per litre.
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