Oil edges lower as US gasoline stockpiles forecast to increase

Oil edged lower toward $40 a barrel before U.S. government data that’s forecast to show gasoline stockpiles increased, while rising virus infections raised concern stricter controls will be extended.

U.S. gasoline supplies expanded by 1 million barrels last week, according to a Bloomberg survey, while nationwide crude stockpiles are projected to have fallen for a second week. Official data is due Wednesday with industry figures expected later Tuesday. Meanwhile, rising coronavirus cases have forced major fuel-consuming states including California, Florida and Texas to reimpose measures such as shutting bars and banning indoor dining.

Oil’s recovery from its plunge below zero in April appears to have hit a wall with surging infections across major economies raising doubts about a swift demand rebound. Unprecedented supply cuts by OPEC and its allies that have supported prices so far are set to wind down next month and producers are yet to decide on whether to extend the curbs.

“Oil is stuck in a no man’s land right now,” said Jeffrey Halley, a senior market analyst for Asia Pacific at Oanda. “Positive exuberance about the reopening of economies is tempered by the re-imposition of partial lockdowns as coronavirus cases flare up across the world.”

Prices
West Texas Intermediate for August delivery fell 0.5% to $40.44 a barrel on the New York Mercantile Exchange as of 1:04 p.m. Singapore time after closing 2 cents lower on Monday There was no settlement on Friday due to public holiday in the U.S. Brent for September settlement dropped 0.5% to $42.90 on the ICE Futures Europe exchange Brent’s three-month timespread was 52 cents in contango, where prompt prices are cheaper than later-dated contracts, the widest since June 24

Prices

West Texas Intermediate for August delivery fell 0.5% to $40.44 a barrel on the New York Mercantile Exchange as of 1:04 p.m. Singapore time after closing 2 cents lower on Monday
- There was no settlement on Friday due to public holiday in the U.S.
Brent for September settlement dropped 0.5% to $42.90 on the ICE Futures Europe exchange
- Brent’s three-month timespread was 52 cents in contango, where prompt prices are cheaper than later-dated contracts, the widest since June 24

U.S. gasoline stockpiles rose for a second week, according to the survey, which would see inventories at the highest level in a month. Supplies of distillates, a category that includes diesel, increased by 500,000 barrels, while crude stocks fell by 3 million barrels.

Meanwhile, the pace of new infections from Tokyo to Iran and Australia is raising concerns about a fresh virus wave, while U.S. cases approached the 3 million mark. Gasoline consumption in the U.S. during the Independence Day holiday — usually a high point for demand — was more than 22% below last year’s levels, according to GasBuddy.