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July 9, 2020

Oil prices steady as Covid-19 fears outweigh US gasoline recovery

Oil prices were slightly changed as worries about renewed lockdowns related to Covid-19 in the US offset signs of US gasoline demand recovery.

By Himaja Ganta

Oil prices were slightly changed as worries about renewed lockdowns related to Covid-19 in the US offset signs of US gasoline demand recovery.

Brent crude futures increased $0.02, or 0.05%, at $43.31 a barrel, while US West Texas Intermediate (WTI) crude futures were down $0.03, or 0.07%, to $40.87 per barrel, Reuters reported.

An increase in Covid-19 cases across several US states has raised the prospect of renewed lockdowns which are expected to hold back any sustained recovery in fuel demand.

National Australia Bank commodity research head Lachlan Shaw was quoted by the news agency as saying: “The market’s struggling to get strong conviction to the upside at the current point in time. There’s mixed evidence on demand.”

Data released by industry group the US Energy Information Administration (EIA) highlighted a fall in the US gasoline stockpiles by 4.8 million barrels last week that ended on 3 July.

Gasoline demand has been decreasing in areas where lockdowns were renewed in some of the US states, while demand on the US East Coast, where Covid-19 infections seem to be under control, was recovering well, Shaw added.

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On 8 July, the US reported over 60,000 new Covid-19 cases. This is the biggest count ever reported by a country in a single day, according to a Reuters tally.

The market is also awaiting details of a meeting on 15 July of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together known as OPEC+.

The producers will conclude if they have to reduce or extend their record 9.7Mbpd supply cut from next month during the meeting.

Furthermore, OPEC member Libya, which has been blockaded since January this year, is trying to restart exports from its terminals, with Libya’s state-owned National Oil Corp lifting force majeure at the Es Sider oil terminal on 8 July.

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