By Barani Krishnan
Investing.com — Demand for fuel remains suspect amid stockpile builds and the rage in new coronavirus infections. But oil bulls holding out hopes for $45 and beyond for a barrel are fighting to slow any price drop.
New York-traded West Texas Intermediate, the benchmark for U.S. crude futures, settled down 83 cents, or 2%, at $41.07 per barrel on Thursday. It was the first meaningful slide since July 16 on the WTI, which remains up more than 1% for the current week and nearly 5% higher for the month.
London-traded Brent, the global benchmark for oil, meanwhile, slid 98 cents, or 2.2%, to settle at $43.76.
On Wednesday, WTI fell just 2 cents despite an unexpected crude stockpile build of 4.9 million barrels reported by the Energy Information Administration. Brent, meanwhile, fell 3 cents.
One day prior to that, the U.S. benchmark hit $42.40, its highest since March, while its London peer rose to a four-month peak of $44.88 — keeping to oil bulls’ target of achieving a minimum $45 a barrel for both in the near term.
Even if oil doesn’t get to $45 soon, the determination to keep it above $40 is evident among oil bulls.
Case in point: How well the market held up in Thursday’s morning trade in New York, despite data suggesting a fresh tick up in stockpiles at the Cushing, Oklahoma, storage hub that takes delivery of contracted barrels of WTI.
Genscape, the market intelligence firm which leads reporting on Cushing, noted a 1.32-million barrel crude gain at the hub for the week ended July 21.
But through most of Thursday, WTI barely fell more than 30 cents, deepening its slide only in the last half-hour of trade.
“The oil demand outlook should struggle in the short-term as geopolitical tensions put global trade relations at risk and as the coronavirus spread seems to have crippled reopening momentum,” said Ed Moya, analyst at New York-based OANDA.
Thursday’s drop in oil prices came amid data showing that some 1.4 million Americans filed for first-time unemployment claims last week, as a new wave of coronavirus infections continued to overwhelm the world’s largest economy that just emerged from lockdowns two months ago.
The United States recorded more than 915,000 Covid-19 cases over the past two weeks, more than the number reported for all of June.
Top U.S. pandemics expert Anthony Fauci said earlier this month that the daily case growth could reach 100,000 without proper social- distancing and other safety measures.
Nearly 4 million Americans have already been infected by the COVID-19 so far, with a death toll reaching above 143,000, according to Johns Hopkins University. A new model by the University of Washington also predicts 200,000 coronavirus deaths in the United States by Oct. 1, casting further doubts on economic reopening from lockdowns.
The U.S. economy shrank 5% in the first three months of 2020 for its sharpest decline since the Great Recession of 2008-09, as most of the 50 states in the country went into lockdown to stem the outbreak of the virus. While most businesses have reopened over the past two months, economists still warn of a double-digit recession by the second quarter — meaning job losses could continue.