Oil prices dropped on Friday, extending huge losses from overnight as the coronavirus cases in the U.S. soared this week, raising fears that a new wave of the COVID-19 outbreak might hurt demand in the world’s biggest fuel and crude consumer.
Brent crude was down by 61 cents or 1.58% at $37.94 per barrel by 09:09 West Africa Time, having slumped by 8% in the previous session.
U.S. West Texas Intermediate (WTI) dipped by 71 cents or 1.95% to $35.63 a barrel after losing 8% on Thursday.
Bonny Light, Nigeria’s premium oil grade, depreciated by 4.80% or $1.91 to close at $37.86 per barrel at the last session. Qua Iboe, another major national grade, went down by 20 cents or 0.49% during the session to close at $40.34.
The reality that the pandemic might be far from over has brought the rebound that lifted oil from the lows recorded in April to an abrupt end with the infections in the U.S. alone crossing the two million mark.
Brent and WTI are approaching their first weekly decline in seven weeks with both of them down by more than 12% as rising inventories also drag on prices.
Read also: Oil prices extend fall on fears of demand recovery, Bonny Light now $39.77
“U.S. inventories are up this week, against many analysts expectations (while) COVID-19 cases are also showing signs of a second wave in the U.S. and elsewhere,” said Greg Priddy, Director for Global Energy and the Middle East, at Stratfor.
Producers from the U.S., as well as from the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a group known as OPEC+, have been slashing output, some by record amounts. OPEC+ cut output by 9.7 million barrels per day (bpd), nearly one-tenth of the pre-pandemic demand, and agreed last week to extend the reduction.
“It is now clear that the deepest OPEC+ cuts, 9.7 million bpd, will end at the end of July, ratcheting down to 7.7 million bpd,” Priddy added.
U.S. crude and gasoline storage grew last week, according to government data. The crude oil stockpiles swelled to a record 538.1 million barrels as cheap imports from Saudi Arabia flowed into the country.
The situation has given rise to concerns about a persisting imbalance in demand and supply as states including Texas and Arizona are seeing their coronavirus cases jump and are struggling to grapple with an increasing number of patients filling hospital beds.
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