Oil Edges Lower Near $61 With Near-Term Demand Concerns in Focus

Oil edged lower in early Asian trading on concerns about the near-term demand outlook amid the uneven recovery from the pandemic.

Futures in New York slid 0.6% to trade near $61 a barrel after two days of gains. Fuel consumption is facing a setback after some countries in Europe extended or reimposed lockdowns, while in the U.S., New York City’s mayor urged a pause on reopening. In Southeast Asia, demand has hit a plateau and it appears unlikely to reach pre-virus levels until the end of the year or later.

While oil’s sustained advance this year stalled recently, there is confidence in the longer-term outlook as Covid-19 vaccinations are rolled out worldwide and as the U.S. unleashes significant stimulus. OPEC+ members are continuing to put a floor under prices through a series of output cuts, with the group scheduled to meet next week to determine production policy for May.

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The prompt timespread for Brent was 10 cents a barrel in backwardation on Monday — a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 67 cents at the start of the month.