Oil slumped for the sixth day in the longest streak of losses since February 2020, as the rise in worldwide COVID-19 cases fueled fears about slowing fuel demand and a surprise rise in US gasoline inventories added to the pressure.
Brent crude was down 87 cents, or 1.3%, to $67.36 a barrel as of 0447 GMT, after touching $67.10 at the start of the session, the lowest since May 24.
West Texas Intermediate crude (WTI) fell $1.05, or 1.6%, to $64.41 a barrel, after falling as low as $64.24, the lowest since May 24.
WTI fell over 7%, while Brent fell more than 5% in the six-day series; This is the longest since the six-day decline for both contracts that ended on February 28, 2020.
Prices fell as deaths from the virus surged last month in the United States, the world’s largest oil consumer, as investors continue to worry about the rise in infections caused by the Delta variant of the coronavirus worldwide.
Crude oil prices remain sensitive at $65 WTI and $67 Brent, mid to late summer support levels.
Slow growth in China, the world’s largest oil importer, more restraints amid rising COVID-19 cases, and a couple of low US economic data last week have all caused to the softness in oil prices.
A move below $65 in WTI could say that prices are returning to the second-quarter trading ranges of $57 to $65. That would be a pretty big drop from the levels we’ve seen over the last few months, and it certainly confirms growing concerns about the delta’s spread and its implications for fourth-quarter growth.
A surprise increase in US gasoline stockpiles last week raised concerns about slowing demand, especially as the Northern Hemisphere summer is typically the time when fuel demand is at its highest. However the dilemma is, they prepare to ramp up crude production while the peak summer driving season in the US is soon coming to an end.
Gasoline inventories rose 696,000 barrels to 228.2 million, against analysts’ expectations of a decline of 1.7 million barrels, the Energy Information Administration said on Wednesday.
But the EIA also said that US crude inventories fell 3.2 million barrels last week to 435.5 million, the lowest level since January 2020.
U.S. shale oil production is expected to hit 8.1 million barrels per day in September, the highest since May 2020, according to the Energy Information Administration’s monthly drilling efficiency report.
The thing to say in this case is that oil prices will be under pressure in the short term due to seasonal factors and pandemic fears.
