Oil prices recover from weekly fatalities with claim upsurge

Oil prices creep up on demand recovery, tempered by virus outbreaks

The new cases raise concern that further shut-ins could weaken demand for oil and endanger the industry recovery.

Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year's levels, data provided to Reuters by a location technology company, TomTom, showed. A record crude supply cut by the Organization of the Petroleum Exporting Countries and allies has kept the oil market much stronger than in April, when Brent hit a 21-year low below $16 a barrel and US crude turned negative.

However, sentiment has been dented by fears a spike in COVID-19 infections in southern USA states could stall the demand recovery, especially as some of those states such Florida and Texas, are among the biggest gasoline consumers.

The other factor pushing crude prices lower was another increase in U.S. commercial crude oil inventories, by 1.4 million barrels for the week ending June 19, much higher than the market estimate of a 0.3 million barrel increase. Traders were looking for a build of 1.2-million-barrels.

Both S&P Global Platts and Argus Media will launch Gulf Coast assessments on June 26 to reflect light, sweet oil loaded for shipment from there.

That could undermine the steady increase in refining output, with USA refiners now operating at almost 75% of their capacity, per official government data. But shipments may take a hit over the next few months after record purchases in May crushed port infrastructure, another signal of limited interest in US crude and weaker pricing to come.

What is a dead cat splat?

Signs of weakening demand from the world's largest oil consumer are now starting to weigh on export prices for American crude, according to industry participants. In contrast, the company reported that the average natural gas price realisation during 2019-20 improved to US$ 3.46 per MMBTU (million British Thermal Units) as compared to US$ 3.21 per MMBTU during 2018-19. "I think early on, people can extend a little grace, but I'm not sure the population would stand for it now".



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