Oil slips as fresh COVID-19 outbreaks face draw in U.S. fuel stocks

By Laura Sanicola NEW YORK (Reuters) - Oil prices edged lower on Wednesday as a drawdown in U.S. distillate stockpiles for the first time since March and a sharp drop in U.S

Reuters June 18, 2020 01:05:21 IST
Oil slips as fresh COVID-19 outbreaks face draw in U.S. fuel stocks

COVID-19 outbreaks face draw in U.S. fuel stocks" src="https://images.firstpost.com/wp-content/uploads/reuters/06-2020/18/2020-06-17T041635Z_1_LYNXMPEG5G0BI_RTROPTP_2_USA-OIL-EMPLOYMENT.jpg" alt="Oil slips as fresh COVID19 outbreaks face draw in US fuel stocks" width="300" height="225" />

By Laura Sanicola

NEW YORK (Reuters) - Oil prices edged lower on Wednesday as a drawdown in U.S. distillate stockpiles for the first time since March and a sharp drop in U.S. crude production faced concerns over fuel demand due to fresh outbreaks of COVID-19 .

Brent crude was down 14 cents, or 0.3%, at $40.82 a barrel by 12:54 EDT (1654 GMT). U.S. West Texas Intermediate (WTI) fell 22 cents, or 0.6%, to $38.16 a barrel.

U.S. crude inventories rose to a record high last week for a second week in a row, but distillate stockpiles fell following weeks of significant builds as refiners continued to blend jet fuel into their distillate pool, government data showed.

"That snapped a 10-week streak of builds, and the market needed that," said Bob Yawger, director of energy futures at Mizuho in New York.

U.S. crude production fell by 600,000 barrels per day last week to 10.5 million bpd, its lowest since March 2018. Some of that was due to Storm Cristobal, which shut more than one-third of U.S. offshore output.

U.S. shale producers were expected to restore roughly half a million bpd of crude output by the end of June, according to crude buyers and analysts.

The World Health Organization said it would update its guidelines after results showed the corticosteroid medication dexamethasone cut death rates by about a third among the most severely ill COVID-19 patients.

However, the virus is spreading in parts of the United States, while flights were cancelled and schools were shut in Beijing to head off a new virus outbreak in the Chinese capital.

"We think the oil market is not currently pricing in a significant probability of either second waves of coronavirus cases in key consumers and the associated lockdowns, or anything less than a rapid return to economic business-as-usual," Standard Chartered analysts said.

Weak economic activity is still weighing on demand. U.S. fuel demand, as measured by product supplied, is down 20% over the past four weeks, compared with the year-ago period, the government said.

OECD Total Oil Industry Stocks https://fingfx.thomsonreuters.com/gfx/ce/xegpbydrkvq/15.JPG

(Reporting by Laura Sanicola in New York; Additional reporting Bozorgmehr Sharafedin in London, Jane Chung in Seoul; Editing by David Gregorio and Marguerita Choy)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.