Oil Dips as Coronavirus Fears Offset Gasoline Recovery Signs

The US confirmed over 60,000 new coronavirus cases on Wednesday, the biggest increase reported by a nation in a single day

Concerns about renewed coronavirus lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand on Thursday to keep a lid on oil prices. The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Brent crude LCOc1 futures were down nine cents, or 0.2 percent, to $43.20 by 1429 GMT, after gaining 0.5 percent on Wednesday, while U.S. West Texas Intermediate (WTI) crude futures slipped 31 cents, or 0.7 percent, to $40.59, after rising 0.7 percent the previous day.

"Support will disappear after this week as coronavirus cases are surging in several U.S. states," Tamas Varga at PVM Oil Associates said, adding that a fall in prices was likely. Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.

Oil Dips

Oil industry
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But a spike in coronavirus cases across several U.S. states raised the prospect of renewed lockdowns that would likely dent any sustained recovery in fuel demand. That kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.

U.S. gasoline demand was falling in areas where lockdowns were being reinstated, although on the East Coast, where coronavirus infections were under control, it was recovering well, Lachlan Shaw, head of commodity research at National Australia Bank, said. The United States reported more than 60,000 new COVID-19 cases on Wednesday, the biggest increase reported by a country in a single day.

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