Oil prices pulled back from a recent rally Friday amid speculation that travel over Memorial Day weekend would be far less than usual at the typically busy start of the summer vacation season.
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West Texas Intermediate crude oil, the U.S. benchmark, fell 1.98 percent to $33.25 per barrel as shelter-in-place orders and concern about exposure to COVID-19 weighed on the consumer-driven U.S. economy. Brent crude, the international standard was down 2.58 percent at $35.13.
“With social distancing guidelines still in practice, this holiday weekend’s travel volume is likely to set a record low,” Paula Twidale, senior vice president of AAA Travel, said in a recent statement.
The current record low for Memorial Day is 2009, when just 31 million travelers hit the road as the country was beginning to emerge from the Great Recession.
This year, stay-at-home orders issued by governments around the world removed about 30 million barrels of demand each day, which has slowly begun to return.
WTI prices have rallied 33 percent over the nine sessions through Thursday. The gains have been supported by two consecutive weeks of declining U.S. inventories as producers shut in production and the U.S. shifted barrels to its Strategic Petroleum Reserve.
“We've had that big run-up in crude oil prices, which has given an incentive for shale oil producers to think about restarting a number of wells around the country, which would add to production,” Andrew Lipow, president of the Houston-based consulting firm Lipow Oil Associates, told FOX Business.
Friday’s selling comes amid talk that Libya, which has been mired in a civil war, could restart production by June 10. Doing so would add more supply to a market that is already grappling with too much inventory. A flare-up in tensions between the U.S. and China, the world's two largest economies, may also drag sales lower.
“Any time that the market feels concerns about a trade war between the U.S. and China, that could lead to lower demand for oil," Lipow said.