Oil prices under renewed pressure on fears rising COVID cases will dent demand

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Oil prices under renewed pressure on fears rising COVID cases will dent demand


Crude oil futures were under renewed pressure Thursday as worries over rising COVID-19 cases in major oil-consuming countries outside the U.S. underlined worries over the energy demand outlook.

West Texas Intermediate crude for May delivery
CL.1,
-2.96%

CLK21,
-2.96%

was down $1.35, or 2.2%, at $59.83 a barrel on the New York Mercantile Exchange. May Brent crude
BRN00,
-2.68%

BRNK21,
-2.70%
,
the global benchmark, dropped $1.18, or 1.8%, to $63.07 a barrel on ICE Futures Europe.

“Europe tightening lockdown restrictions has unnerved the markets, but COVID cases are also rising sharply in key developing economies such as India and Brazil, whose oil consumption is also a key factor in supporting prices,” said Sophie Griffiths, market analyst at Oanda, in a note. “In a short period, the outlook for global recovery has deteriorated, raising questions over future demand.”

India reported 47, 262 cases and 275 deaths on Wednesday, marking its biggest daily rise this year, the BBC reported. Brazil has seen a spike in infections, while total deaths in the country from COVID-19 exceeded the 300,000 threshold, making it the second country to do so, according to the Associated Press.

Coronavirus tally: Global cases of COVID-19 top 124.8 million and U.S. tops 30 million cases

The fall in prices Thursday comes after a volatile two-day trading period that saw crude tumble by around 6% on Tuesday and bounce by around 6% on Wednesday. The bounce in Wednesday’s session came as traders reacted to the blockage of the Suez Canal by a container ship that ran aground. The canal, which divides continental Africa from the Sinai Peninsula, connects the Red Sea with the Mediterranean Sea. An estimated 10% of total seaborne oil trade passes through the waterway.

Read: Why the blockage of the Suez Canal matters for oil prices

Despite efforts to dislodge the container ship, it remained stuck on Thursday, with at least 150 other vessels waiting to pass through the canal idled, according to authorities.



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