Oil prices waned early Wednesday as panic of prolonged repercussions of the coronavirus outbreak overshadowed signs of increasing demand and output cuts by chief oil producing nations.
Brent crude July futures, as of 01:31 West African Time, were trading at $34.54 per barrel, having dipped by 11 cents or 0.3%.
U.S. West Texas Intermediate (WTI) crude futures were down by 13 cents or 0.4%. With the WTI crude futures contract for June terminating Tuesday, the July contract emerged as the front month, preventing the disruption seen in May’s expiry last month when prices ended in the negative territory.
Bonny Light, Nigeria’s premium oil grade, had weakened by $1 or $2.95% to $32.95 on Tuesday, its first loss in a great many days.
For three weeks or so, oil prices have increased steadily, with benchmark and WTI Brent inching past the $30 mark, backed by vast cuts in production implemented by global oil majors and the force of increasing demand.
A dim view of the future state of things in the market by the U.S. Federal Reserve, nevertheless, is hurting prices.
Jerome Powell, Chair U.S. Federal Reserve said yesterday that retrenchment actions, carried out by state and local governments, would depress a rebound in the economy, while Eric Rosengren, President Boston Federal Reserve Bank said U.S. unemployment rate would likely hover at double-digit levels by the end of the year.
“Crude oil prices gave up earlier gains amid concerns about the long-lasting economic damage the coronavirus has caused,” said ANZ Research in a note.
Crude storage in the U.S. crumbled by 4.8 million barrels to 521.3 million in the week to 15th May according to data from the American Petroleum Institute (API), obtained Tuesday by Reuters.