Oil prices have fallen as Covid-19 continues to spread in the US.
Rystad Energy’s daily market comment is provided today by Oil Markets Analyst Louise Dickson:
"The oil priced is declining back towards US$40 and it’s because of a combination of factors.
The US dollar has had a relatively strong streak, gasoline stocks builds are anticipated, and pessimism over the short-term oil demand move the market today.
Positive economic indicators out of Europe and Asia are still holding prices above the 40-dollar market, versus the growing number of Covid-19 cases in the US.
The number of people infected by the virus has increased in 16 US states, but a swell of deaths, should it come, could still be another few weeks out, meaning that if US states are making policy based on the current death toll (which is at a relative record low since the end of March), then by the time the death toll again surges, it will already be too late to re-enact stricter lockdowns.
Over the last few weeks, traders have put more weight on how supply evolves, but from now everyone’s eyes are on demand again and how Coid-19 expands in the US.
August to September in particular can be a defining period, so trader vigilance won’t take summer holidays this year.
Some positivity could come if Covid-19 spread slows down, but the reality is that US developments do move markets and oil prices with them. And positivity is not the word there at the moment."
Read the article online at: https://www.oilfieldtechnology.com/special-reports/07072020/oil-falls-on-us-covid-19-cases/