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Oil prices recede over demand uncertainty, Hong Kong conflict; Bonny Light gains $1.06

$41.9bn worth of oil stolen from Nigeria – NEITI

Oil prices weakened on Wednesday as fears over the speed of fuel demand recovery hurt sales despite the increasing removal of coronavirus curbs in several countries, while the rift between the U.S. and China over Hong Kong fuelled negative sentiment.

At 02.20 West African Time, Brent crude futures came down 21 cents or 0.6% to $35.96 a barrel while its American counterpart benchmark, West Texas Intermediate (WTI) shed 31 cents or 0.9%, trading at $34.04.

Bonny Light, Nigeria’s foremost crude grade, had enlarged by $1.06 or 3.21% to $34.07 per barrel on Tuesday.

As part of reforms to scale down the weighty impact of the coronavirus crisis on fuel demand, the Organisation of the Petroleum Exporting Countries (OPEC) and other producers led by Russia are slashing supply approximately 10 million barrels per day May through June to boost prices.

Read also: Oil prices advance on increased optimism of output cut, Bonny Light now $34.09

With more states in the U.S. resuming economic activities after lockdowns, hope of improved demand is strengthening confidence even though experts warned that recovery would be fragile.

The Memorial Day holiday, that recently ended, normally ushers in the beginning of the peal U.S. demand season.

In a note seen by Reuters, ANZ Research said “early estimates suggest gasoline demand is down by as much as 30% from last year as people stay close to home.”

A couple of banks and economic thinkers are seeing a stabilised oil market ahead beginning from June. Yet Eurasia Group believes it could be rather too optimistic.

“There is … a significant risk of repeat outbreaks and lockdowns. Even without them, some restrictions – especially on aviation – will remain in place,” the group said in a note.

With fuel demand shaping up favourably in the U.S. even at a slow pace, indications are available that crude storage is declining.

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