Oil slides as virus surge weighs on demand outlook
US WTI crude futures were down $0.7, or 1.7%, at $40.57 a barrel. PHOTO: REUTERS
Oil prices fell on Thursday as surging coronavirus infections around the world threatened to jeopardise a recovery in fuel demand just as major oil producers are set to raise output.
The most-active Brent crude contract for October fell $0.58, or 1.3%, to $43.51 a barrel at 1224 GMT. The September Brent contract, which is expiring on Friday, fell $0.57 to $43.18 a barrel.
US West Texas Intermediate (WTI) crude futures were down $0.7, or 1.7%, at $40.57 a barrel.
Both benchmark contracts rose on Wednesday after the US Energy Information Administration (EIA) reported the largest one-week fall in crude stocks since December.
“The recent resurgence of the coronavirus is an ominous sign that the upside is limited in the immediate future,” Tamas Varga of oil brokerage PVM said.
Deaths from Covid-19 have now topped 150,000 in the United States, while Brazil, with the world’s second-worst outbreak, set daily records of confirmed cases and deaths. New infections in Australia hit a record on Thursday.
The potential hit to the demand rebound comes just as the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, are set to step up output in August, adding about 1.5 million barrels per day to global supply.
“The easing OPEC+ supply restrictions combined with the return of some US production may test the resilience of market sentiment in the coming weeks,” Stephen Innes, Chief Global Market Strategist at AxiCorp said.
Total and Royal Dutch Shell reported small profits in the second quarter as their oil trading businesses shielded them from the full force of the pandemic-induced demand loss.