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Oil prices may drop over low demand, as Bonny Light loses $1.28

Oil prices fall after U.S. stockpile rise trigger supply worries

Oil held above $44 per barrel on Friday and was on track for its biggest weekly fall since June as low demand figures complicated fears over a sluggish recovery from the coronavirus pandemic.

A United States government report revealed local gasoline demand dropped in the latest week. Middle distillates inventories at Asia’s oil hub Singapore have climbed beyond a nine-year high, official statistics showed.

Brent crude rose 37 cents, or 0.84%, to $44.44 a barrel by 12:08 West Africa Time (WAT).

U.S. West Texas Intermediate was at $41.79 a barrel, down 39 cents, or 0.94%, heading for its first weekly drop in five weeks.

Bonny Light, Nigeria’s premium oil grade, slipped by $1.28 or 2.96% to $42 per barrel on Thursday just as Qua Iboe, another major national grade fell 70 cents or 1.57% at $43.81.

“Despite the price gains today, which somehow smoothed the losses of the week, the bigger market picture is overall bearish sentiment that kicked off with lower gasoline demand reports on Wednesday,” said Paola Rodriguez-Masiu, analyst at Rystad Energy.

Read also: Oil prices hit one-month low on demand worries; Bonny Light sheds 2.54%

U.S. payrolls figures will be in focus on Friday at 13:30 WAT, which could be a selling trigger if an expected slowdown in hiring is steeper than forecast. The unemployment rate is projected to fall to 9.8% from 10.2%.

“Demand concerns are firmly at the front and centre of traders’ minds. Today’s non-farm U.S. payroll report will be closely watched and a disappointing number could be the next bearish catalyst,” said Stephen Brennock of oil broker PVM.

Oil has rallied since April when Brent plunged to more than two decades low below $16 and U.S crude briefly slid into the negative territory.

An unprecedented supply cut since May by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, has boosted prices.

OPEC kicked off in April to ease the magnitude of the cuts, lifting output by almost a million barrels per day according to a Reuters survey.

Ronald Adamolekun

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Ronald Adamolekun

Ronald Adamolekun is a creative writer with a mixed bag of experience in fields as diverse as data journalism, financial reporting and editing.

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