Rise in global coronavirus cases dampens oil prices

Singapore — Oil prices eased for a second day on Thursday as mounting coronavirus cases globally raised demand concerns, though a drawdown in US crude stocks for a fifth straight week capped losses.

Brent crude oil futures dipped 5 US cents, or 0.1%, to $56.01 a barrel by 1.24am GMT, while US West Texas Intermediate (WTI) fell by 1c to $52.90 a barrel.

“Oil market’s sizzling rally likely took a hiatus as the stronger dollar and the omnipresent gasoline supply overhang offset the evaporating US crude inventories,” said Stephen Innes, chief global market strategist at Axi.

US crude oil stockpiles last week fell more than expected, while gasoline and distillate inventories rose as refiners ramped up output to its highest level since August, the Energy Information Administration (EIA) said on Wednesday.

China, the world’s second-largest oil consumer, reported its biggest daily jump in new Covid-19 cases in more than 10 months as infections in northeastern Heilongjiang province nearly tripled, underscoring the growing threat ahead of a major national holiday.

Governments across Europe announced tighter and longer coronavirus lockdowns on Wednesday due to a fast-spreading Covid-19 variant first detected in Britain and as vaccinations are not expected to help much for another two to three months.

Oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to Covid-19 vaccines cloud the outlook, an official with International Energy Agency (IEA) said.

Still, a hefty Covid-19 relief package, which US president-elect Joe Biden is due to unveil on Thursday, kept losses in check.

Top oil exporter Saudi Arabia has cut supplies of February-loading crude for some Asian buyers by up to a quarter, sources told Reuters, which supported prices. 

Reuters