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Oil prices in longest losing streak since February 2020

Oil prices in longest losing streak since February 2020

FILE PHOTO: A petrol station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS/Max Rossi/File Photo

TOKYO : Oil prices fell for a sixth day in their longest losing streak since February 2020, as a spike in COVID-19 cases worldwide fuelled fears of lower fuel demand while a surprise build in U.S. gasoline inventories and a stronger dollar added to the pressure.

Brent crude was down US$1.11, or 1.6per cent, at US$67.12 a barrel at 0639 GMT, after touching the lowest since May 24 at US$67.06 earlier in the session.

U.S. West Intermediate crude (WTI) fell US$1.35, or 2.1per cent, to US$64.11 a barrel after falling to as low as US$64.02, also the lowest since May 24.

WTI has dropped more than 7per cent while Brent has slumped more than 6per cent during the six-day losing streak, the longest since a six-day decline for both contracts that ended on Feb. 28, 2020.

The declines reflect worries over rising coronavirus infections caused by its Delta variant, with virus-related deaths in the United States, the world's largest oil user, spiking over the past month.

"Crude prices continue to look vulnerable around those mid to late summer support levels - US$65 in WTI and US$67 in Brent," Craig Erlam, senior market analyst at OANDA Europe, said in a note.

Slower growth in China, the world's biggest oil importer, caused by new restrictions in response to rising COVID-19 cases and some weakness in U.S. data over the past week have driven the softness in oil prices, Erlam said.

"A move below US$65 in WTI, for example, could see prices drop back into Q2 trading ranges between US$57 and US$65. This would be quite a drop from the levels we've seen the last couple of months," he added.

An unexpected rise in U.S. gasoline inventories last week also fanned concerns over slowing demand, given demand for gasoline typically peaks during the northern hemisphere summer.

Gasoline stockpiles rose by 696,000 barrels to 228.2 million, the Energy Information Administration said on Wednesday, against analysts' expectations for a 1.7 million-barrel drop.

However, U.S. crude inventories fell 3.2 million barrels last week to 435.5 million, their lowest since January 2020, the EIA said.

"The U.S. peak summer driving season is ending soon just as the country is set to raise output," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

U.S. shale oil output is expected to rise to 8.1 million barrels per day in September, the highest since May 2020, according to the EIA's monthly drilling productivity report.

"Oil prices will stay under pressure in the short-term from seasonal factors and pandemic fears," Kikukawa said.

A stronger dollar also weighed on investor sentiment.

The dollar rose to a nine-month high against its major peers on expectations that the U.S. Federal Reserve will start tapering its huge stimulus this year, making dollar-priced oil more expensive to holders of other currencies.

(Reporting by Yuka Obayashi; Editing by Michael Perry, Christian Schmollinger and Tomasz Janowski)

Source: Reuters


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