Oil prices dropped early on Thursday, following a record number of new daily COVID cases in major oil consumer India and a jump in U.S. gasoline stocks estimated by the EIA.
As of 10:55 a.m. EDT on Thursday, WTI Crude prices were down 0.69 percent at $59.33 and Brent Crude was trading down 0.43 percent on the day at $62.87.
Crude oil prices continued to reflect on Thursday a sizeable build in U.S. gasoline inventories reported by the Energy Information Administration (EIA) on Wednesday.
The EIA reported a crude oil inventory draw of 3.5 million barrels for the week to April 2, but a hefty gasoline stock increase and a build in distillates. In gasoline, the EIA estimated an inventory build of 4 million barrels for the reporting period, compared with a 1.7-million-barrel decline a week earlier. Gasoline production averaged 9.3 million bpd last week, a slight decline on the week before.
On Thursday, concerns about U.S. road fuel demand with the bearish gasoline stocks increase were compounded by concerns about fuel demand elsewhere.
India, the world’s third-biggest oil importer, reported a fresh record of daily new coronavirus cases on Thursday. India imposed earlier this week a lockdown on its biggest city Mumbai, while the resurgence of the virus in the country is potentially threatening fuel demand and crude oil imports.
Other parts of the world also saw a resurgence of cases, as Canada’s province of Ontario imposed a month-long lockdown as of Thursday, closing all non-essential retailers and issuing a stay-at-home order.
In Japan, a major importer of energy including crude oil, the Governor of Tokyo, Yuriko Koike, said on Thursday she would ask the Japanese government to consider new stricter emergency measures amid a wave of new cases of the more infectious strains of COVID.
Commenting on oil prices, Saxo Bank said on Thursday:
“While the demand outlook into the second half looks strong, short-term challenges remain to keep Brent stuck in a $60 to $65 range for now.”