Oil slips as coronavirus fears offset gasoline recovery signs

07/09/2020 | 04:27am

By Julia Payne

Oil prices edged lower on Thursday as concerns about renewed COVID-19 lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand.

Brent crude futures fell 21 cents, or 0.4%, to $43.08 by 0908 GMT, after gaining 0.5% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures dipped 25 cents, or 0.6%, to $40.65 a barrel , after rising 0.7% on Wednesday.

"It's rangebound due to worries about a second coronavirus wave versus strong stock markets, especially in China, while U.S. gasoline data also prevents oil prices from falling...support will disappear after this week as coronavirus cases are surging in several U.S. states," Tamas Varga at PVM Oil Associates said.

"A downside break-out is more likely...and the resumption of Libyan exports, if it goes ahead, would be another bearish development."

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.

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), the highest level since March 20. [EIA/S]

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.

U.S. gasoline demand was falling in areas where lockdowns were being reinstated though demand on the U.S. East Coast, where coronavirus infections were under control, was recovering well, according to Lachlan Shaw, head of commodity research at National Australia Bank.

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.

Libya, whose ports have been blockaded since January, is trying to resume exports after the state oil firm lifted force majeure at its Es Sider oil terminal on Wednesday. However, a tanker was prevented from entering the port.

(Reporting by Sonali Paul in Melbourne and Shu Zhang in Singapore; editing by Tom Hogue and Jason Neely)

Thomson Reuters 2020
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