Oil prices drop on demand recovery fears amid U.S. virus surge

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures slid 84 cents, or 2.1%, to $39.26 a barrel at 0138 GMT.
  • Brent crude futures fell 77 cents, or 1.8% to $41.95 a barrel.
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 fell around 2% in early trade on Tuesday on worries that new clampdowns on businesses to stem surging coronavirus cases in California and other U.S. states could threaten the nascent recovery in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures slid 84 cents, or 2.1%, to $39.26 a barrel at 0138 GMT, while Brent crude futures fell 77 cents, or 1.8% to $41.95 a barrel.

Both benchmark contracts lost just over 1% on Monday.

California’s governor on Monday ordered bars to shut and restaurants, movie theatres, zoos and museums in the country’s most populous state to cease indoor operations as coronavirus cases and hospitalizations soared.

The state’s two largest school districts, in Los Angeles and San Diego, also said they would teach only online when school resumes in August.

California’s moves follow the recent reinstatement of some restrictions in other states, such as Florida and Texas.

“With the California soft lockdown now framing the picture, July could be an even more challenging month for oil than expected with even more demand woes emanating from coronavirus-linked uncertainty,” AxiCorp market strategist Stephen Innes, market strategist said in a note.

The market will be closely watching data on fuel consumption due later on Tuesday from the American Petroleum Institute industry group and on Wednesday from the U.S. Energy Information Administration.

Analysts estimate U.S. gasoline stockpiles fell by 900,000 barrels and crude oil inventories fell by 2.3 million barrels in the week to July 10, a preliminary Reuters poll showed.

With fuel demand growth hampered, the market will also be eyeing the next move from the Organization of Petroleum Exporting Countries and its allies, together known as OPEC+, whose market monitoring panel is set to meet on Tuesday and Wednesday.

Under their existing agreement, OPEC+ is set to taper its record supply cut of 9.7 million barrels per day to 7.7 million bpd from August through December.

Citi analysts said implementing the 2 million bpd increase in output from August could weigh on the market given the demand uncertainties, along with the potential for increased Libyan output, a return of 20% to 30% of curbed North American production and an end to China’s crude buying spree.

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

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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

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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 dips as U.S. inventory build stokes supply fears

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Reuters
KEY POINTS
  • Brent crude futures fell 13 cents, or 0.3%, to $42.95 a barrel by 0019 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures dropped 10 cents, or 0.3%, to $40.52 a barrel.
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

Oil prices eased in early trade on Wednesday as industry data showing a build in U.S. crude stockpiles and a forecast for U.S. crude output to fall less than anticipated in 2020 added to worries about oversupply.

Brent crude futures fell 13 cents, or 0.3%, to $42.95 a barrel by 0019 GMT. U.S. West Texas Intermediate (WTI) crude futures dropped 10 cents, or 0.3%, to $40.52 a barrel.

Prices were little changed in the previous session and have been held in a narrow band over the past two weeks as concerns about a spike in coronavirus cases globally tempers optimism about a recovery in fuel demand.

U.S. crude oil stockpiles rose last week, against expectations for a draw, although gasoline and distillate inventories fell more than expected, data from industry group the American Petroleum Institute showed on Tuesday.

The U.S. Energy Information Administration’s (EIA) said on Tuesday U.S. crude oil production is expected to fall by 600,000 barrels per day (bpd) in 2020, a smaller decline than the 670,000 bpd it forecast previously.

However, it also expected global oil demand would recover through the end of 2021, predicting demand of 101.1 million bpd by the fourth quarter of next year.

“The EIA’s forecast of a lower decline in U.S. output was partially offset by its outlook for firm demand recovery, which limited losses in oil markets,” Hiroyuki Kikukawa, general manager of research at Nissan Securities said.

“Still, expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allies would taper oil output cuts from August and softer U.S. equities added to pressure,” he said.

Abu Dhabi National Oil Co (ADNOC) plans to boost oil exports in August, the first signal that OPEC and its allies, together known as OPEC+, are preparing to ease record oil output cuts next month, three sources familiar with the development told Reuters.

Key ministers of the OPEC+ are due to hold talks next week.

Meanwhile, the number of confirmed coronavirus cases in the United States pushed past 3 million on Tuesday, according to a Reuters tally.

Oil prices inch higher on output cut support, but U.S. coronavirus spike caps gains

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures climbed 13 cents, or 0.3%, to $40.76 a barrel.
  • Brent crude futures rose 7 cents, or 0.2%, to $43.17, adding to a 0.7% gain on Monday.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
Apu Gomes | AFP | Getty Images

Oil prices cautiously rose in early trade on Tuesday with major producers sticking to supply cuts, but gains were capped as U.S. coronavirus cases surged, potentially hampering a recovery in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures climbed 13 cents, or 0.3%, to $40.76 a barrel at 0103 GMT, recouping a 2 cent loss from Monday.

Brent crude futures rose 7 cents, or 0.2%, to $43.17, adding to a 0.7% gain on Monday.

The market is still being supported by a bigger-than-expected drawdown in U.S. crude stockpiles reported last week and by record supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, AxiCorp strategist Stephen Innes said.

However, traders are also closely watching prospects for U.S. fuel demand, with 16 states reporting record increases in new cases of COVID-19 in the first five days of July, according to a Reuters tally. Florida confirmed a record 11,000 cases in a single day, more than any European country reported in one day at the height of the crisis.

“Summer driving demand in the U.S. is low, keeping gasoline demand subdued, and a reintroduction of lockdowns is a major headwind,” ANZ said in a note.

Data from the American Petroleum Institute industry group later on Tuesday and the U.S. Energy Information Administration on Wednesday are expected to show a 100,000 barrel rise in gasoline stockpiles, six analysts polled by Reuters estimated.

Meanwhile a U.S. court on Monday ordered the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to Midwest and Gulf Coast regions, over environmental concerns.

Market sources in the Bakken said the closure of the 570,000 barrels per day (bpd) pipeline while a thorough environmental impact statement is completed will likely divert some oil flows to transportation by rail.