Oil prices fell about $1 a barrel on Thursday as investors worried that renewed lockdowns to contain the spread of coronavirus in the United States would again sink fuel consumption.
Brent crude LCOc1 futures fell 94 cents, or 2.2%, to settle at $42.35 a barrel, after gaining 0.5% on Wednesday. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.28, or 3.1%, to settle at $39.62 a barrel.
The United States reported more than 60,000 new COVID-19 cases on Wednesday, the biggest increase reported by a country in a single day. Coronavirus cases have been on the rise in 42 of the 50 U.S. states over the past two weeks, according to a Reuters analysis.
The renewed orders are likely to dent any sustained recovery in fuel demand. Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20. [EIA/S]
In storage hub Cushing, Oklahoma, crude stockpiles rose around 2 million barrels in the week to Tuesday, traders said, citing a Thursday report from Genscape.
In India, fuel demand fell 7.9 percent in June compared with the same month last year, denting market sentiment further on Thursday.
“The Indian demand numbers were disappointing,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “That didn’t fit the narrative we were hearing that India’s economy was bouncing back.”
Still, futures have held around $40 a barrel and some analysts expect prices to hold in a range ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Today Friday oil prices fell, adding to steep losses from the previous session, and were headed for weekly declines on worries that renewed lockdowns following a surge in coronavirus cases in the United States and elsewhere would suppress fuel demand.
Brent looks set for a weekly decline of nearly 2% and U.S. crude for a fall of more than 3%. Trading was quiet with Singapore on holiday for an election.
While many analysts are expecting economies and fuel demand to bounce back from the pandemic, record daily increases in coronavirus infections in the United States, the world’s biggest oil consumer, raised concerns about the pace of any recovery.
More than 60,500 new COVID-19 cases were reported in the United States on Thursday, setting a daily record, with Americans being told to take new precautions. The tally was also the highest daily count yet for any country since the pathogen emerged in China late last year.
In Australia, the government on Friday will consider reducing the number of citizens allowed to return to the country from overseas, after authorities ordered a new lockdown of the country’s second-most populous city, Melbourne.
Oil inventories also remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak.
U.S. crude oil inventories rose by nearly 6 million barrels last week after analysts had forecast a decline of just over half that figure.
Oil Future close 9th July, 2020
Brent crude: $ 42.35 (-0.94)/brl FM contract with delivery Sep
Light crude (WTI): $ 39.62 (-1.28)/brl FM contract with delivery Aug
Gasoil ARA; $ 364.50 (-3.25)/mton FM contract with delivery Jul
NY Harbor Ulsd: $ 376.79 (-3.11)/mton FM contract with delivery Aug
The Oil Market is trading at GMT 05.17: Brent -46 cents and WTI -54 cents
Expect Fuel Oil prices to drop 6 – 8 usd/mton today. MGO and NY Harbor Ulsd down about 3 – 4 usd/mton.