Oil Prices Slip as Coronavirus Case Surge Dents Fuel Demand Hopes

Crude oil prices on track for monthly gain as dollar supports

Crude oil prices on track for monthly gain as dollar supports

Oil prices rose on Wednesday after a steep drop in USA crude inventories, but another record day for coronavirus cases worldwide kept gains in check.

Crude oil prices moved higher on Wednesday after official data showed a much larger than expected decline in us crude inventories in the week ended July 24.

Both benchmark contracts rose on Wednesday after the U.S. Energy Information Administration (EIA) reported the largest one-week fall in crude stocks since December.

Brent crude futures LCOc1 rose $0.59, or 1.4%, to $43.81 a barrel by 1216 GMT.

US crude inventories fell by 10.6 million barrels in the week to July 24 to 526 million barrels, compared with analysts' expectations for a 357 000-barrel rise.

Bjornar Tonhaugen, head of oil markets at Oslo-based Rystad Energy, said traders will next week closely monitor oil output increases by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

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"As long as we're recording new daily cases, the risk for oil demand is just too strong", said Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia.

"The expectation is that the OPEC cuts are going to lead to bigger draws in the United States and this could be the beginning of it", said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Deaths from COVID-19 topped 150 000 in the United States on Wednesday, while Brazil, with the world's second-worst outbreak, set new daily records of confirmed cases and deaths.

The raging COVID-19 pandemic is keeping alive concerns about falling fuel demand causing an oversupplied market as record numbers of infections are reported globally, including the us, the world's biggest consumer of oil.

In factuality, the foundering in crude oil futures' prices on Tuesday was nearly entirely goaded by a rattling battle in the Capitol Hill over a new pandemic stimulus proposal, while a new aid package unravelled by the US Republicans on Monday has been whacked out in the US Congress less than a week before at least 32 million Americans would lose an additional $600 per week in pandemic unemployment benefits. The US Federal Reserve pledged to continue to help prop up the economy, providing some support to oil.

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