(Bloomberg) -- Oil prices eased in Asia as a pickup in coronavirus cases in parts of the U.S. cast doubt on the strength of a demand recovery.
Futures in New York were down as much as 1.5%, after gaining 2.3% Friday to close at the highest level since March 6. There were more signs of a possible resurgence of the virus in U.S. Sun Belt states, with California reporting record new cases and infections in Florida jumping by more than the weekly average.
The market rose 9.6% last week as output curbs by the world’s top producers continued to erode a supply glut. OPEC’s crude production declined to an average 24.19 million barrels a day in May, from 30.5 million in April, the producer bloc said on its Twitter page, as members implemented an agreement to slash output.
Oil exploration in the U.S. shrank for a 14th straight week amid ongoing uncertainty about a recovery in energy demand. Drillers idled 10 oil rigs in onshore U.S. fields last week, bringing the total to 189, according to data released Friday by Baker Hughes Co.
WTI’s front-month spread rose Friday to the strongest level in a month. The July-dated contract expires Monday, which could add extra volatility. Meanwhile, Brent crude’s prompt spread settled in backwardation -- a bullish indicator that points to tighter supply conditions -- on Thursday for the first time since early March.
Hedge funds reduced their net bullish wagers on crude by 7.1% in the week ended June 16, the first retreat since March, data from the U.S. Commodity Futures Trading Commission showed Friday, as a spike in Covid-19 cases in parts of the U.S. revives concerns over demand for fuel.
A cluster of oil tankers off China’s coast is growing and the vessels are waiting longer to offload their cargoes amid a lack of onshore storage space after a buying spree earlier this year. The number of oil-laden tankers parked in Chinese waters has swelled since the start of the month with almost 200 ships expected over the course of June, according to vessel-tracking information compiled by Bloomberg and data intelligence firm Kpler.
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