Oil prices fall as U.S. fuel demand remains weak

FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

SINGAPORE (Reuters) – Oil prices edged lower on Friday after U.S. inventory data showed lacklustre fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets.

Brent crude LCOc1 slipped 36 cents, or 1%, to $34.93 a barrel by 0106 GMT and U.S. West Texas Intermediate crude CLc1 was at $33.20 a barrel, down 51 cents, or 1.5%. Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries.

Thursday’s data from the Energy Information Administration showed that U.S. crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.

“Memorial Day weekend did not bring U.S. motorists out in droves like many market bulls were hoping,” RBC Capital Markets analyst Christopher Louney said in a note.

Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June.

Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.

Reporting by Florence Tan; Editing by Kenneth Maxwell

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