From the Field
Oil retreats over demand recovery fears
LONDON, July 2, 2020 – Oil was down on Thursday morning in Asia, giving up some of its gains from the previous session. Investor worries about a stall in the black liquid’s demand recovery increased after California became the latest US state to re-impose lockdown measures on Wednesday.
The measures include the ban of indoor restaurant dining, bar closures and stepping up social distancing in much of the state in order to curb the spike in Covid-19 cases.
Brent oil futures were down 0.17% to $41.96 by 10:03 PM ET (3:03 AM GMT) and WTI futures slid 0.30% to $39.70.
Both Brent and WTI futures made gains on Thursday after the US Energy Information Administration (EIA) predicted a 7.195 million-barrel draw in crude oil supplies for the week ending June 26. EIA had predicted a 1.442 million-barrel gain for the previous week, and analyst forecasts prepared by Investing.com predicted a 710,000-barrel draw.
The EIA’s prediction follows the American Petroleum Institute (API)’s surprise prediction on Tuesday of an 8.156 million-barrel draw for the same week.
But the EIA data also showed rise in gasoline inventories, against expectations of a fall, soured investor sentiment.
“Counter-seasonal builds in gasoline inventories as stockpiles unexpectedly rose are not precisely a bullish delight… the EIA data showed that gasoline imports hit the highest level since last August and peaked the most on a seasonal basis in nine years,” Stephen Innes, AxiCorp strategist, warned in a note.