Oil prices gain on fall in U.S. crude stockpiles
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[July 02, 2020] By
Julia Payne
LONDON (Reuters) - Oil prices rose on
Thursday as a sharp drop in oil stockpiles outweighed concerns that a
spike in U.S. coronavirus infections and revived lockdown measures in
California could stall a recovery in fuel demand.
Brent crude <LCOc1> futures were up 21 cents or 0.5% at $42.24 a barrel
by 1114 GMT, after rising 1.8% in the previous session.
U.S. West Texas Intermediate (WTI) crude <CLc1> futures rose 20 cents,
or 0.5%, to $40.02 a barrel, adding to a 1.4% rise on Wednesday.
U.S. crude inventories <USOILC=ECI> fell 7.2 million barrels from a
record high last week, far more than analysts had expected, U.S. Energy
Information Administration data showed, as refiners ramped up production
and imports eased. [EIA/S]
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"Typically a drop in inventories signals a positive development in
demand or a negative move in supply. But as supply is fairly stable, the
market assumes demand stands strong, despite the new COVID-19 infections
and restrictions," said Louise Dickson, oil markets analyst at Rystad
Energy.
"New lockdowns in California would have depressed the market any other
day, but yesterday’s EIA inventory report balanced the bad news and
prevailed."
New U.S. COVID-19 cases rose by nearly 50,000 on Wednesday, according to
a Reuters tally, in the biggest one-day spike since the start of the
pandemic.
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A view shows railroad freight cars, including oil tanks, in Omsk,
Russia May 1, 2020. REUTERS/Alexey Malgavko
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California rolled back efforts to reopen its economy, banning indoor restaurant
dining in much of the state, closing bars and beefing up enforcement of social
distancing and other measures.
Capping gains, however, analysts noted that gasoline stockpiles were higher
despite expectations of a fall.
Analysts highlighted worries about the spike in cases in heavily populated U.S.
sun belt states, which are among the country's biggest consumers of gasoline.
Attention will be on U.S. driving activity over the upcoming July 4 holiday
weekend and how quickly U.S. producers revive shut-in production, analysts said.
(Reporting by Sonali Paul and Seng Li Peng; editing by Richard Pullin and Jason
Neely)
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