On Monday, as data showed an accelerating economic recovery in China, which was offset by fears of inflation, oil prices slipped after Brent hit $70 a barrel.
Brent crude futures for May were at $68.27 a barrel, down $0.95 or 1.4% by 1515 GMT while US West Texas Intermediate crude for April was at $64.66 a barrel, also down $0.95 or 1.5%.
A massive US stimulus package passed this month, raised prospects for global economic growth but also inflation.
Analysts said a pact by top producers to rein in output and a rebound in demand due to vaccine rollouts will keep pushing prices upwards despite any temporary setbacks.
“The inflation genie has found life rather uncomfortable in its bottle.”Said Oanda senior market analyst Jeffrey Halley.
“Futures spreads remain in backwardation, and dips in prices remain shallow and short-lived,” he added, referring to a market structure in which the current value is higher than prices for later contracts, encouraging oil sales.
“Both (benchmarks) will find a procession of willing buyers if those regions are visited.”He said.
In January-February, China’s industrial output growth quickened, beating expectations, while its daily refinery throughput data rose 15 percent from the same period a year earlier, data showed.
“There is increasing confidence that global oil demand is rebounding as US Covid-19 death toll is decreasing while China’s apparent oil demand rebounded.”Said SEB chief commodity analyst Bjarne Schieldrop.
The supply cuts come as the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, decided earlier this month to extend most of its supply cuts into April.
Earlier in February, the United States overtook Saudi Arabia to be India’s second-largest supplier, data from trade sources showed.
Separately, US energy firms have cut the number of oil and natural gas rigs operating by one in the first weekly drop since November, according to Baker Hughes Co.