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Oil prices drop on demand worries as coronavirus cases rise

Published 06/18/2020, 08:50 AM
Updated 06/18/2020, 09:00 AM
© Reuters.
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By Sonali Paul
MELBOURNE, June 18 (Reuters) - Oil prices fell more than 1%
in early trade on Thursday as a spike in new coronavirus cases
in China and the United States renewed fears that people would
stay home and stall a recovery in fuel demand even as lockdowns
ease.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were
down 1.6%, or 60 cents, at $37.36 a barrel at 0035 GMT, adding
to a loss of 42 cents on Wednesday.
Brent crude LCOc1 futures fell 1.1%, or 45 cents, to
$40.26 a barrel. The benchmark contract declined 25 cents on
Wednesday.
Worries about fuel demand rose after a surge in coronavirus
cases led Beijing to cancel flights and shut schools and several
U.S. states, including Texas, Florida and California, reported
sharp increases in new cases. A rise in U.S. crude stockpiles to a record high for a
second week in a row also weighed on sentiment, even though U.S.
government data showed inventories of gasoline and distillate,
which include diesel and heating oil, fell.
"People are concerned about the coronavirus resurging in
China and crude stockpiles rising," said Lachlan Shaw, head of
commodity research at National Australia Bank.
While prices dipped, they remained in the $35 to $40 band
they have been trading in so far in June, with the Organization
of the Petroleum Exporting Countries (OPEC) and other major
producers mostly sticking to promised supply cuts, U.S. shale
producers holding back output, and fuel demand gradually
improving.
"It's going to be up and down, rangebound for the next
little while on a balance of OPEC and ally cuts against the
massive inventory build and demand recovery and potential
restarts of production in the United States," Shaw said.


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