Concerns about a resurgence in coronavirus cases around the globe are being blamed for causing oil futures to fall sharply in Thursday’s trading with U.S. prices settling below $40 a barrel for the first time in three weeks.
Some believe the growing number of COVID-19 cases will result in less demand for gasoline and fuel.
“Demand concerns are front and center,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.
Iraq’s rising exports, meanwhile, have “raised concerns that Russia and the Saudis might start unwinding the OPEC+ deal as Iraq continues to cheat” on production cuts, he said. Iraq’s crude-oil exports averaged 2.75 million barrels per day, based on figures from Refinitive Eikon and an industry source, Reuters reported Thursday—up 50,000 barrels from June.
“Terrible Jobs data and a worse than expected GDP added to demand woes, but the fact that President [Donald] Trump tweeted the question that the election could be delayed freaked people out,” he said.
Against that backdrop, West Texas Intermediate crude for September delivery on the New York Mercantile Exchange dropped $1.35, or 3.3%, to settle at $39.92 a barrel. That was the first settlement below $40 and lowest front-month contract finish since July 9, according to Dow Jones Market Data. September Brent crude which expires at the end of Friday’s session, fell 81 cents, or nearly 1.9%, at $42.94 a barrel on ICE Futures Europe.
“Prospects of slower economic recovery” and OPEC’s hurry to trim production cuts show that the “demand/supply dynamics are not supportive of further short-term gains in oil markets,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note.
U.S. economic data Thursday showed an economy badly battered by the coronavirus shrank at a record 32.9% annual pace in the second quarter. Initial jobless claims rose by 12,000 to 1.434 million in the week ended July 25.
The number of COVID-19 cases around the world climbed above 17 million on Thursday, according to data aggregated by Johns Hopkins University, and the death toll rose to 667,688. The U.S. case tally climbed to 4.43 million and the death toll rose to 151,716, after crossing 150,000 late Wednesday. California and Florida posted single-day record death numbers on Wednesday and California added more than 12,300 cases, according to the New York Times.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, are due in August to boost output by around 2 million barrels a day as they relax production curbs put in place earlier this year.
Oil prices had edged higher Wednesday after the Energy Information Administration reported that U.S. crude inventories fell by 10.6 million barrels for the week ended July 24, the largest weekly decline since the 11.5 million-barrel fall reported for the week ended Dec. 27. The data, however, also revealed an unexpected climb in gasoline stocks, pulling futures prices for the fuel down by 1.9% Wednesday.
Locally, Devon Energy took a nearly 5% drop in trading on Thursday as shares dropped 50 cents and settled at $10.34.
SandRidge Energy fell 4.54% or 6 cents a share before ending the day at $1.26.
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Marathon Oil Corp. (MRO) down 0.23 at 5.51 – change 4.01%
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Noble Energy (NBL) down 0.44 at 10.22 – change 4.13%
Occidental Petroleum (OXY) down 1.26 at 15.77 – change 7.40%
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Phillips 66 (PSX) down 2.50 at 63.09 – change 3.80%
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CLOSING TOP UTILITY STOCKS
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