(Bloomberg) -- Oil held below $40 a barrel on rising concerns that it will be some time before there’s a meaningful recovery in demand.
U.S. benchmark crude futures fell 0.6% after dropping 3.2% on Tuesday. Global demand won’t meaningfully recover for at least 18 months, according to the heads of the world’s largest independent oil trading houses.
That comes as Total SE and Pierre Andurand, chief investment officer and founder of Andurand Capital Management LLP, signaled that demand will peak as early as within the next six to 10 years. Crude trading volumes have hit their lowest this year amid concerns over the virus’s impact on demand.
On Tuesday, the industry-funded American Petroleum Institute reported a decline in domestic crude stockpiles, according to people familiar, ahead of U.S. government figures on Wednesday. The API report also showed a draw in distillate inventories, but a rise in Cushing and gasoline stockpiles. If confirmed by the EIA numbers on Wednesday, it would be the second consecutive week distillate supplies declined.
New York City’s daily rate of positive Covid-19 tests is more than 3% for the first time in months, and more serious action will be needed to stop the spread, Mayor Bill de Blasio said. That’s as global confirmed deaths from the coronavirus top 1 million.
On top of a weaker demand outlook, the market is struggling with an increase in supply from OPEC+ members. Russia likely exceeded its OPEC+ quota, compounding the worry that the group may be adding more supply than the market can handle. Libya’s oil industry is also returning, with oil output rising to at 250,000 barrels a day from an earlier 90,000 barrels.
©2020 Bloomberg L.P.