Oil traded near $41 a barrel in New York as coronavirus cases continued to surge globally, casting doubt over the market’s rebounding consumption.
US crude traded lower, while Brent edged higher. Goldman Sachs recommended buying global benchmark futures over WTI as American inventories grow. US crude stockpiles rose last week, according to government data, but gasoline demand recovered to pre-pandemic levels.
Meanwhile, California and Texas recorded some of their biggest daily increases in virus cases and deaths and Melbourne — Australia’s second-largest city — went into lockdown.
Oil has rebounded from a plunge below zero in April as record output cuts from Opec+ help rebalance the market. But some are predicting a long recovery from the pandemic, with Standard Chartered Plc estimating oil consumption next year at 2017 levels, meaning the virus would have destroyed four years of growth. Though the global Brent benchmark has more than doubled from its lows, prices have struggled to make further gains away from the low $40s.
“It seems that finding further momentum to extend the rally is very difficult,” said Hans van Cleef, senior energy economist at ABN Amro. “The threat of more new lockdowns will continue to prevent oil prices to rally further.”
West Texas Intermediate for August delivery lost 8 cents to $40.82 a barrel as of 8:33 am New York time, after rising 0.7% on Wednesday.
Data from the UK government showed that demand for road fuels continued to pick up last week, though the pace of increases is beginning to slow. Similarly, though consumption has rebounded in China, higher crude prices are set to force independent refiners to curb their processing, potentially weighing on crude demand, a Bloomberg survey showed.