Oil prices pull back from five-month highs as rising
product stocks weigh
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[August 06, 2020] By
Shadia Nasralla
LONDON (Reuters) - Oil prices slipped off
five-month highs on Thursday as bearish sentiment about fuel demand
undermined support from a weak dollar <.DXY> and falling U.S. crude
inventories.
Brent crude <LCOc1> fell 23 cents to $44.94 a barrel by 1100 GMT, while
U.S. crude <CLc1> was down 48 cents at $41.71, breaking a four-day
streak of gains.
The two benchmarks had risen to their highest since March 6, completing
a four-day rally, after the Energy Information Administration reported a
much bigger than expected drop in U.S. crude stockpiles.
A weaker U.S. dollar was also supportive for oil prices as it makes
dollar-priced oil cheaper for holders of other currencies.
The dollar index, which measures the greenback against a basket of six
major currencies <.DXY>, logged its biggest monthly percentage fall in a
decade in July and a Reuters poll found analysts expected it to continue
falling into next year.
The index was up around 0.06% Thursday after falling for two sessions
but stayed near two-year lows.
Still, oil investors remain wary of rising U.S. refined product
inventories at a time when U.S. central bankers said the resurgence in
coronavirus cases was slowing the economic recovery in the world's
biggest oil consumer.
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A 3D printed oil pump jack is seen in front of displayed stock graph
in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration
EIA data showed distillate stockpiles, which include diesel and heating oil,
climbed to a 38-year high and gasoline inventories unexpectedly rose for a
second week.
The U.S. EIA calculated gasoline demand remains at around 8.6 million barrels
per day, around 10% lower than a year earlier, just as the U.S. driving season
was winding down.
"In the medium term the weak demand is likely to weigh more heavily than the
positive sentiment, which is why we expect prices to correct in the near
future," Commerzbank analyst Eugen Weinberg said.
JPMorgan trimmed its oil demand forecast for the second half of the year by 1.5
million barrels per day, but raised its average Brent price forecast for the
whole year to $42 a barrel from $40.
(Additional reporting by Sonali Paul in Melbourne and Seng Li Peng in Singapore;
Editing by Edmund Blair and Susan Fenton)
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