Oil prices head for weekly decline as coronavirus cases surge in U.S. and elsewhere

CNBC

Reuters
KEY POINTS
  • Oil prices fell on Friday, adding to steep losses from the previous session, and were headed for weekly declines on worries that renewed lockdowns would suppress demand.
  • Brent crude was down by 25 cents, or 0.6%, at $42.10 a barrel by 0341 GMT after falling more than 2% on Thursday.
  • U.S. oil fell 33 cents, or 0.8%, at $39.29 a barrel after a drop of 3% in the previous session.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices fell on Friday, 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 crude was down by 25 cents, or 0.6%, at $42.10 a barrel by 0341 GMT after falling more than 2% on Thursday.

U.S. oil fell 33 cents, or 0.8%, at $39.29 a barrel after a drop of 3% in the previous session.

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.

“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.

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 eases as coronavirus fears offset gasoline recovery signs

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.3%, to $40.76 a barrel by 0229 GMT, after rising 0.7% on Wednesday.
  • Brent crude futures slipped 7 cents, or 0.2%, to $43.22, after gaining 0.5% on Wednesday.
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 drifted lower on Thursday as concerns about renewed COVID-19 lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand.

U.S. West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.3%, to $40.76 a barrel by 0229 GMT, after rising 0.7% on Wednesday.

Brent crude futures slipped 7 cents, or 0.2%, to $43.22, after gaining 0.5% on Wednesday.

“The market’s struggling to get strong conviction to the upside at the current point in time,” said Lachlan Shaw, head of commodity research at National Australia Bank. “There’s mixed evidence on demand.”

Oil prices rose on Wednesday as 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 had expected, as demand climbed to 8.8 million barrels per day (bpd), highest since March 20.

A spike in COVID-19 cases across several U.S. states, however, raised the prospect of renewed lockdowns that would likely hold back any sustained recovery in fuel demand.

That has kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.

Gasoline demand was falling in areas where lockdowns were being reinstated in the United States, while demand on the U.S. East Coast, where coronavirus infections were under control, was recovering well, Shaw said.

The United States reported more than 58,000 new COVID-19 cases on Wednesday, the biggest increase ever reported by a country in a single day, with infections climbing in 42 out of 50 states, according to a Reuters tally.

The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Together called OPEC+, the producers could decide to pare or extend their record 9.7 million bpd supply cut from August.

The panel has been pressing OPEC+ over-producers, such as Iraq and Nigeria, to improve their compliance with the curbs.

Angola has agreed to comply fully with its supply commitments, moving to cut more over July to September to make up for previous excess production, OPEC sources said this week.

Meanwhile, OPEC member Libya, which has been blockaded since January, is trying to resume exports, with Libya’s National Oil Corp lifting force majeure at the Es Sider oil terminal on Wednesday. An oil tanker, however, was prevented from entering the port.

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 creep up on demand recovery, tempered by virus outbreaks

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.
  • Brent crude futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices rose on Friday, extending gains from the previous day on optimism about recovering fuel demand worldwide, despite a surge in coronavirus infections in some U.S. states and indications of a revival in U.S. crude production.

U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.

Brent crude futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.

Overall, commodities markets were taking a positive view on the global recovery on Friday despite worries about coronavirus flare-ups, said Michael McCarthy, chief market strategist at CMC Markets.

“It does appear the market is ignoring supply and demand fundamentals and moving on sentiment,” he said.

Analysts said satellite data showing strong pick-ups in traffic in China, Europe and across the United States pointed to a recovery in fuel demand.

Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.

However, there are fears a spike in Covid-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

“The risk of a fresh outbreak could hit the recovery in demand,” ANZ Research said in a note.

The prospect of increased U.S. crude production also kept a lid on gains on Friday.

A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

WTI would have to be between $36 and $41 a barrel for a majority of producers to restore output, nearly a third said in the survey. Another 27% said prices would have to range between $41 and $45 per barrel.