Oil prices slid early on Friday, extending heavy overnight losses on a surge in U.S. coronavirus cases this week that has raised the prospect of a second wave of the outbreak slamming demand in the world’s biggest consumer of crude and fuel.
FILE PHOTO: The sun sets behind an oil pump outside Saint-Fiacre, near Paris, France September 17, 2019. REUTERS/Christian HartmannWest Texas Intermediate CLc1 was down $1.32, or nearly 4%, at $35.02 a barrel by 0011 GMT, after slumping more than 8% on Thursday. Brent crude LCOc1 was down $1.15, or 3%, at $37.40 a barrel, having dropped nearly 8% the previous session.
A rally off April’s lows has come to a shuddering halt this week as the market faced the reality that the coronavirus pandemic may be far from over globally, with cases in the United States alone passing 2 million this week.
The oil benchmarks are heading for their first weekly decline in seven, with Brent dropping about 12%, while U.S. crude is heading for a loss of more than 10%.
“A sustainable rally needs to include improving gasoline demand, reducing inventories, increasing product margins to the point where refiners kickstart runs,” RBC Capital Markets said, noting that “U.S. driving patterns are far from normal.”
While producers have been cutting supply, demand remains constrained by the outbreak, with gasoline stockpiles in the U.S. last week rising more than expected to 258.6 million barrels, according to government data.
U.S. crude inventories rose against forecasts by 5.7 million barrels to a record 538.1 million barrels, as cheap imports from Saudi Arabia flowed into the country.
In the meantime, states including Texas and Arizona are struggling to cope with a rising number of coronavirus patients filling hospital beds.
In Houston, Lina Hidalgo, the senior official for the county that includes the city that is the heart of the U.S. oil industry, warned “we may be approaching the precipice of a disaster”.
More than 7.43 million people have been infected by the novel coronavirus around the world and more than 400,000 have died, according to a Reuters tally.
(This story corrects weekly drop for U.S. oil to first time in seven weeks, not second weekly decline, in paragraph 4)