By Ann Koh and Alex Longley
Traders are now returning their focus to the recovery in oil demand that has appeared to stall this month. Crude prices are moving in a narrow range of about $4 in August and a gauge of market volatility remains near its lowest level since January.
“With little oil infrastructure damage reported so far, and with shut-in production likely to return in the coming days, it looks as though oil will remain trading in this fairly narrow range that we’ve become accustomed to,” said Warren Patterson, head of commodities strategy at ING Bank NV.
As the pace of the global energy demand recovery takes centerstage, there are shaky signs emerging across the globe. About half of India’s trucking fleet is still idled, leading to a bleak outlook for diesel consumption, while sales of motor fuels in the U.K. and a recovery in European air travel are flat-lining.
The slowdown is resulting in weaker margins for producing fuels, reducing the incentive for refiners to purchase more crude. In Europe, profit from turning crude into diesel is at its narrowest since June, while that for gasoline in America is the lowest since April.