Oil. Picture: REUTERS
Oil. Picture: REUTERS

Melbourne — Oil prices drifted lower on Thursday as concerns about renewed Covid-19 lockdowns in the US outweighed signs of a recovery in US gasoline demand.

US West Texas Intermediate (WTI) crude futures fell 14 US cents, or 0.3%, to $40.76 a barrel by 2.29am GMT, after rising 0.7% on Wednesday.

Brent crude futures slipped 7c, or 0.2%, to $43.22, after gaining 0.5% on Wednesday.

"The market’s struggling to get strong conviction to the upside at the current point in time," said Lachlan Shaw, head of commodity research at National Australia Bank. "There’s mixed evidence on demand."

Oil prices rose on Wednesday as data from the US Energy Information Administration showed US gasoline stockpiles fell by 4.8-million barrels last week, much more than analysts had expected, as demand climbed to 8.8-million barrels per day (bpd), the highest since March 20.

A spike in Covid-19 cases across several US states, however, raised the prospect of renewed lockdowns that would likely hold back any sustained recovery in fuel demand.

That has kept the benchmark crude contracts in tight ranges this week, though holding above $40 a barrel.

Gasoline demand was falling in areas where lockdowns were being reinstated in the US, while demand on the US east coast, where coronavirus infections were under control, was recovering well, Shaw said.

The US reported more than 58,000 new Covid-19 cases on Wednesday, the biggest increase ever reported by a country in a single day, with infections climbing in 42 out of 50 states, according to a Reuters tally.

The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of Opec and its allies.

Together called Opec+, the producers could decide to pare or extend their record 9.7-million bpd supply cut from August.

The panel has been pressing Opec+ over-producers, such as Iraq and Nigeria, to improve their compliance with the curbs.

Angola has agreed to comply fully with its supply commitments, moving to cut more over July to September to make up for previous excess production, Opec sources said this week.

Meanwhile, Opec member Libya, which has been blockaded since January, is trying to resume exports, with Libya’s National Oil Corp lifting force majeure at the Es Sider oil terminal on Wednesday. An oil tanker, however, was prevented from entering the port.

Reuters

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