Oil prices dropped due to the acceleration of the coronavirus outbreak and the increase in US stocks.
Oil, which experienced the biggest loss of about two weeks, fell with the increase in concerns about demand in the USA, the world’s largest economy, with the increase in crude oil stocks in the United States and the coronavirus epidemic regained momentum.
Futures contracts fell below $ 38 a barrel in New York after falling 5.9 percent on Wednesday, as crude oil inventories in the US rose three consecutive weeks. New cases in the US have seen record levels in Florida, California, and Texas, where the governor announced that an “intense outbreak” is spreading across the state. Gasoline futures contracts in the US have been hit hard by concerns about the re-enforcement of restrictions imposed in the fight against coronavirus.
Refinery activities in India are still below the levels seen in 2019. This shows that Asian economies have not yet been able to recover from China, where the virus has emerged. The pessimistic atmosphere in the market caused the global indicator Brent oil to return to the contango state. This situation, where the near-term contract is cheaper than the forward-term contract, shows that concerns about excess supply continue.
While the negative weather in supply continued to exist, the production cuts taken by the OPEC + coalition and the production cuts due to the decline in prices in the US brought the oil market closer to rebalancing. However, this situation occurred despite the difficulties in the global economy, which still has difficulty in overcoming the crisis caused by the epidemic. The International Monetary Fund (IMF) said on Wednesday that there is a much deeper prospect of recession than they had predicted two months ago.
Michael McCarthy, CMC Markets Asia Pacific’s chief market strategist in Sydney, made the following assessments:
“In the oil market, we see an important directional turn, with optimism on economic recovery due to an increase in virus cases.”
“In the next few sessions, we can see that the oil has fallen even more.”
Augtos Futures Texas Oil Fell
Augtos futures West Texas oil (WTI) fell 0.8 percent in the Nymex market to $ 37.70 a barrel at 12:49 Singapore time. US indicator oil is preparing to drop two consecutive weeks for the first time since late April.
Brent oil for August futures dropped 0.9 percent to $ 39.93 a barrel on the ICE Futures Europe market, after falling 5.4 percent on Wednesday. Brent oil is at 23 cents in contango status. This oil was a 5-cent backwardation at the end of last week.