Oil fell the most since late April as economic uneasiness iced USA stock markets, threatening to spoil crude's recovery from a historic drop below zero.
Global benchmark Brent crude was trading at $40.43 per barrel at 0626 GMT for a 3.1% decline after closing Wednesday at $41.73 a barrel.
20,800 new cases were reported in the USA, 4.1% higher compared to last week, meanwhile India reported nearly 10,000 new cases on Thursday, its highest intra-day rise. The cuts represent roughly 10 percent of global oil production. According to the report, gasoline stockpiles dropped by 2.2 million barrels and distillate inventories climbed by 6.1 million barrels.
But consultancy JBC Energy warned higher prices could discourage buying and undercut a fragile recovery in demand.
John Kemp, commodities analyst for Reuters, noted that traders' expectations of a substantial reduction in global stocks over the next year as the world economy recovers from the government-imposed coronavirus lockdowns "are consistent with the gradual drawdown in global oil stocks predicted by the major statistical agencies". EIA expects prices to average $48.00 per barrel in 2021.
"The key for markets to feel like the worst is over is: when will stockpiles peak globally".
The market is grappling with record high USA oil inventories and an uneven demand rebound as signs mount that a second wave of the pandemic could be taking hold in some states.
While discipline from OPEC+ will help to limit oil price downside on a bearish signal from the U.S., a small pull-back is probably unavoidable if United States production starts to increase too soon. Millions of barrels of the region's unwanted crude have been stashed on vessels since the coronavirus wiped out demand, but now volumes are starting to shrink sharply, data compiled by Bloomberg show.
While OPEC+ nations started on May 1 to curb their total oil production by 9.7 million barrels per day (bpd), Iraq failed to do so and is now expected to miss its output quota in June.
For consumption, "EIA estimates US oil consumption will be 23% lower in the second quarter of 2020 compared with the same quarter previous year". July natural gas rose 1 cent to $1.78 per 1,000 cubic feet.
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