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Oil falls as growing coronavirus cases stoke fuel demand worries

CNBC

Reuters
KEY POINTS
  • Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.
  • Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Crude prices fell on Friday as the resurgence of the coronavirus globally and in the United States, the world’s largest oil consumer, dimmed the prospects of fuel demand recovery.

Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT, and U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.

Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.

Increases in the daily cases of the coronavirus, however, globally and in the United States pressured prices. New U.S. COVID-19 cases rose by more than 50,000 on Thursday, setting a record for a third consecutive day, according to a Reuters tally.

“The market has become increasingly confident that easing restrictions on travel and business would boost demand for crude oil, but the pandemic’s progress threatens to derail this recovery,” ANZ Research said in a note.

“The recovery in gasoline demand will plateau until the U.S. economy improves,” it said.

Gasoline demand will be closely watched as the United States heads into its July 4 holiday weekend as many Americans are expected to hit the road.

U.S. gasoline stocks rose by 1.2 million barrels in the week to June 26, according to data from the Energy Information Administration released on Wednesday.

Oil prices slip on demand fears as U.S. virus cases surge

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell 10 cents, or 0.3%, to $39.72 a barrel at 0148 GMT, trimming a 1.4% rise from Wednesday.
  • Brent crude futures eased 6 cents, or 0.1%, to $41.97 a barrel, after rising 1.8% in the previous session.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices dipped on Thursday after the United States recorded its biggest one-day spike in coronavirus cases and California reimposed some lockdown measures, stoking worries a resurgence in COVID-19 cases will stall a recovery in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures fell 10 cents, or 0.3%, to $39.72 a barrel at 0148 GMT, trimming a 1.4% rise from Wednesday.

Brent crude futures eased 6 cents, or 0.1%, to $41.97 a barrel, after rising 1.8% in the previous session.

California sharply rolled back efforts to reopen its economy on Wednesday, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures as COVID-19 infections surged.

Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country’s biggest consumers of gasoline.

New U.S. COVID-19 cases rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic. More than half the new cases each day are in Arizona, California, Florida and Texas.

Oil prices rose in the previous session after U.S. Energy Information Administration data showed U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, as refiners ramped up production and imports eased.

However, analysts noted the data also showed gasoline stockpiles rose due to a sharp increase in imports, against expectations for inventories to fall.

“Counter-seasonal builds in gasoline inventories as stockpiles unexpectedly rose are not precisely a bullish delight,” AxiCorp strategist Stephen Innes said in a note.

“The EIA data showed that gasoline imports hit the highest level since last August and peaked the most on a seasonal basis in nine years.”

All eyes will be on driving activity in the United States over the upcoming July 4th holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.

Oil rises after sharp drop in U.S. crude inventories

CNBC

Reuters
KEY POINTS
  • Brent crude rose 33 cents, or 0.8%, to $41.60 a barrel by 0044 GMT after declining more than 1% on Tuesday.
  • U.S. crude was up 42 cents, or 1.1%, at $39.69 a barrel, having dropped by 1.1% in the previous session.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Wednesday after an industry report showed crude inventories in the United States fell much more than expected, suggesting demand is improving even as the coronavirus outbreak spreads around the world.

Brent crude rose 33 cents, or 0.8%, to $41.60 a barrel by 0044 GMT after declining more than 1% on Tuesday. U.S. crude was up 42 cents, or 1.1%, at $39.69 a barrel, having dropped by 1.1% in the previous session.

U.S. crude and gasoline stocks declined more than expected last week, while distillate inventories rose, data released by the American Petroleum Institute (API) late on Tuesday showed. [API/S]

Crude inventories dropped by 8.2 million barrels to 537 million barrels, against analysts’ forecasts for a draw of 710,000 barrels.

“If the API estimates are vetted by the official government agency data due out tomorrow, this will be viewed as a definite bullish signal,” said Stephen Innes, chief global markets strategist at AxiCorp.

“The reports could go a long way to easing some of those lingering inventory concerns,” he said.

Inventory data from the U.S. government’s Energy Information Administration is due out later on Wednesday.

Still prices are likely to be capped, analysts said, as the world is awash with oil after the coronavirus caused demand for fuel to drop by around a third.

A Reuters poll of analysts indicated that oil prices will consolidate at around $40 a barrel this year, with a recovery potentially picking up in the fourth quarter.

The virus continues to spread around the world with ever increasing rates of infection. Cases now total more than 10 million with more than half a million people dying after catching COVID-19.

Oil prices slip on demand worries, prospect of Libyan supply return

CNBC

Reuters
KEY POINTS
  • Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market.
  • Investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.
  • U.S. West Texas Intermediate (WTI) crude futures traded down  26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% in the previous day.
  • Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain.

Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.

U.S. West Texas Intermediate (WTI) crude futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data.

By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday.

Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.

Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.

But at the same time, coronavirus cases continue to rise in southern and southwestern U.S. states.

“It’s really difficult to say that demand is a one-way street. There are still plenty of risks going both ways,” said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia.

Bulls will be looking for more signs of a demand recovery in data due on Tuesday from the American Petroleum Institute industry group, and from the U.S. government on Wednesday.

A preliminary Reuters poll showed analysts expect U.S. crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.

On the supply side, investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.

Libya’s National Oil Corp (NOC) said on Monday it was making progress on talks with neighboring countries to lift the blockade.

Oil prices drop for second straight session as coronavirus spike cools demand hopes

CNBC

Reuters
KEY POINTS
  • Brent crude dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude was at $37.82, down 67 cents, or 1.7%.
  • Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.

Brent crude dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude was at $37.82, down 67 cents, or 1.7%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The second wave contagion is alive and well,” Howie Lee, economist at Singapore’s OCBC bank said. “That is capping the bullish sentiment that we’ve seen in the last six to eight weeks.”

Other factors restricting oil prices’ advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs.

“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ analysts said.

Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.

“In the next one-two weeks, we should see an uptick in rig count commensurate with the pick-up in oil production,” OCBC’s Lee said.

Elsewhere, U.S. shale oil pioneer Chesapeake Energy Corp filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.