Oil prices headed lower Thursday, as worries about accelerating cases of the coronavirus epidemic in parts of the world took a toll on expectations for demand for crude. Signs of rising U.S. oil inventories also weighed on prices.
Some U.S. states are reintroducing lockdown measures in the world’s largest economy, as well as companies including Apple and Walt Disney Co., reclosing or delaying re-opening businesses.
Fawad Razaqzada, market analyst at Think Markets, said that “it looks like investors are growing increasingly worried about the economic recovery,” as the coronavirus pandemic spreads..
“The persistence of the virus and the rebound in cases has sparked concerns that some US states may be forced to unwind or slow measures to reopen businesses,” he wrote in a Thursday research note.
West Texas Intermediate crude for August was off 60 cents, or 1.6%, at $37.41 a barrel on the New York Mercantile Exchange, following a nearly 5.9% to mark its lowest finish for a front-month contract in a week, according to Dow Jones Market Data.
Global benchmark Brent oil for August delivery declined 45 cents, or 1.1%, to reach $40.08 a barrel on ICE Futures Europe, after receding 5.4% on Wednesday to the lowest level since June 15.
For the week, WTI is seeing a weekly drop of 5.7% so far, while Brent has declined 4.9%.
On Wednesday, the Energy Information Administration reported that U.S. crude inventories rose for a third week in a row, by 1.4 million barrels for the week ended June 19. That compared with a forecast by analysts polled by S&P Global Platts for an average decline of 100,000 barrels. The American Petroleum Institute on Tuesday reported a climb of roughly 1.7 million barrels.
The EIA data also showed crude stocks at the Cushing, Okla., storage hub fell by about 1 million barrels for the week though, but total domestic oil production climbed by 500,000 barrels a day to 11 million barrels a day.
Commodity experts also said that a grim outlook for the global economy from the International Monetary Fund published Wednesday also weighted on sentiment. The IMF sees a global economic contraction of 4.9%, almost 2 percentage points lower than three months ago. “We are definitely not out of the woods. We have not escaped the great lockdown,” said Gita Gopinath, the IMF’s chief economist, at a press briefing.