Oil slips below $40 on record U.S. inventories, COVID
fears
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[June 25, 2020] By
Alex Lawler
LONDON (Reuters) - Oil slipped below $40 a
barrel on Thursday after a more than 5% fall the previous session, as
record-high U.S. crude inventories and a resurgence in coronavirus cases
cast doubt on a recovery in fuel demand.
U.S. crude stocks rose 1.4 million barrels, the Energy Information
Administration said on Wednesday. [EIA/S] This hit crude prices,
although other details the EIA reported such as a fall in gasoline
stocks as demand rose, lent limited support.
"The report was another nail in the bulls' coffin although it was not as
depressing as the price fall suggests," said Tamas Varga of oil broker
PVM. "On the positive side, oil consumption is healthy."
Brent crude fell 54 cents, or 1.3%, to $39.77 at 1150 GMT, and traded as
low as $39.47. The global benchmark dropped 5.4% on Wednesday. U.S. West
Texas Intermediate (WTI) crude declined 56 cents, or 1.5%, to $37.45.
![](http://archives.lincolndailynews.com/2020/Jun/25/images/ads/current/heartland_discover_lda_April_2020.png)
Oil and equities were also pressured by a rise in coronavirus cases. New
infections have surged in some U.S. states and Australia posted its
biggest daily rise in cases in two months.
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![](../images/062520pics/busine45.jpg)
The sun is seen behind a crude oil pump jack in the Permian Basin in
Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant
![](http://archives.lincolndailynews.com/2020/Jun/25/images/ads/current/rohlfs_lda_072017.png)
"Demand, which was expected to rise as COVID-19 subsides, is again under threat
with infections rising in key markets," said Bjornar Tonhaugen of Rystad Energy.
"All eyes are on how governments will react to the new surge of the pandemic."
Also weighing on demand prospects was the International Monetary Fund's
prediction on Wednesday of a deeper global recession than previously thought.
A record supply cut by the Organization of the Petroleum Exporting Countries and
allies has supported the oil market, which is much stronger compared to April,
when Brent hit a 21-year low below $16 a barrel and U.S. crude went negative.
Investors are waiting to see if the producers, known as OPEC+, extend their
record cut beyond July.
(Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in
Singapore; editing by Barbara Lewis and David Evans)
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