Oil dips as surging coronavirus cases threaten demand recovery

Melbourne

OIL prices fell on Thursday, paring gains from earlier in the session, as a resurgence in Covid-19 infections across the globe underpinned concerns over economic growth and a recovery in fuel demand.

European nations are reviving curfews and lockdowns amid the growth in new coronavirus cases. India, which is on track to overtake US with the world's most Covid-19 infections, is bracing for a surge of cases in coming weeks as it heads into its main holiday season. The country is the world's third-biggest oil user.

Brent crude futures dropped 28 cents, or 0.7 per cent to US$43.04 a barrel at 0724 GMT, while US West Texas Intermediate (WTI) crude futures were down 24 cents, or 0.6 per cent , to US$40.80.

The International Energy Agency (IEA) said on Wednesday that a second wave of coronavirus infections could complicate efforts by producers to balance the market.

"Traders are in hyperventilation mode over the extent to which governments may have to renew social mobility restrictions to control the coronavirus's spread," said Stephen Innes, chief global markets strategist at Axi, in a note.

Brent earlier rose by 0.4 per cent and WTI was up 0.6 per cent, extending gains from Wednesday session, after data showed US crude stockpiles fell last week.

The American Petroleum Institute industry group said US crude, gasoline and distillate inventories all fell in the week to Oct 9, according to a report released after market close on Wednesday.

The US Energy Information Administration is due to release its weekly data on Thursday, a day later than normal following a public holiday.

Opec and its allies, together called Opec+, had 102 per cent compliance with their agreement to cut oil supply in September, two Opec+ sources said ahead of a meeting of the Opec+ technical committee on Thursday to review the oil market. REUTERS