Oil prices declined towards $70 a barrel on Thursday as more countries imposed fresh movement restrictions to counter a surge in COVID-19 cases, though Middle East tensions offered support.
Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed restrictions in some cities and cancelled flights, threatening fuel demand.
Read the latest updates in our dedicated coronavirus section.
Brent crude oil futures dropped by 38 cents, or 0.54 percent, to $70 a barrel by 0837 GMT after dipping below that threshold for the first time since July 21.
For the latest headlines, follow our Google News channel online or via the app.
US West Texas Intermediate (WTI) crude futures fell by 34 cents, or 0.5 percent, to $67.81. Both benchmarks fell by more than $2 a barrel on Wednesday.
“China is now facing its most challenging COVID-19 crisis since the initial outbreak was brought under control,” analysts at consultancy FGE said in a note on Thursday.
“The COVID-19 resurgence and the reimposition of restrictions will have negative repercussions on domestic transport fuel demand in the near term,” they said, adding that FGE expects gasoline demand to average about 80,000 barrels per day (bpd) less in August than in July.
In the United States, the world’s biggest oil consumer, COVID-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday, according to a Reuters tally.
Also weighing on prices was a surprise 3.6 million barrel build in U.S. crude stockpiles last week in data from the US Energy Information Administration (EIA).
Tensions in the Middle East kept price declines in check, however.
Israeli aircraft struck what the country’s military said were rocket launch sites in south Lebanon early on Thursday in response to earlier projectile fire towards Israel.
The exchange came after an attack on a tanker off the coast of Oman last Thursday, which Israel blamed on Iran. Two crew members, a Briton and a Romanian, were killed. Iran denied any involvement.
“With tensions brewing amongst Iran and world powers over last week’s drone attack, it seems nuclear deal talks will be lengthy and unlikely to provide imminent sanction relief for Iran,” said Edward Moya, senior analyst at OANDA.
- Saudi petrochemicals company SABIC expects strong H2 after $2 bln quarterly profit
- GCC economies expected to grow 2.2 percent this year: World Bank
- GCC states will take at least 10 years to end oil dependence, says Moody’s
- Kuwait’s KFH eyes government projects, including NEOM in Saudi, plans new sukuk
- Saudi Arabia raises Sept crude prices to Asian customers for a second month: Sources