NEW YORK (Reuters) – Oil prices pulled back slightly on Tuesday as a U.S. Senate committee grilled Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin about aid packages intended to bolster the economy.
FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019. REUTERS/Angus Mordant/File Photo
Prices had risen early on signs producers are cutting output as promised and on an expected demand increase as more countries ease lockdowns imposed to fight the pandemic. They fell after the Senate Banking Committee hearing began and Powell and Mnuchin faced sharp questions. [L1N2D10G]
“The commentary puts a little pinch on the economic outlook and on the demand outlook,” said John Kilduff, a partner at Again Capital Management in New York.
Benchmark Brent crude was down 40 cents or 1.2% at $34.41 a barrel by 12:36 p.m. EST (1636 GMT).
The front-month contract for U.S. West Texas Intermediate crude, which expires on Tuesday, was down 13 cents a barrel, or 0.4%, at $31.69.
The July contract, trading at vastly higher volumes, was down 17 cents at $31.48 a barrel.
Oil prices have risen in the past three weeks as states have rolled back lockdown provisions and global output has decreased.
Another drawdown in U.S. crude stockpiles in official weekly data to be released on Wednesday could support prices more, Kilduff said.
Global demand recovery is expected to be slow. Consultants the Eurasia Group cited “a global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia”.
Still, with fuel demand improving, little chance was seen that crude prices would repeat the historic plunge below zero seen a month ago.
The market was boosted early by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries and others including Russia, a group known as OPEC+, are being implemented.
U.S. production is also falling. And a recovery in fuel demand in India also gathered momentum.
Additional reporting by Yuka Obayashi and Noah Browning; editing by Jason Neely, David Evans and Kevin Liffey
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