August 05, (THEWILL) – Oil prices tumbled towards $70 a barrel on Thursday as more countries imposed fresh movement restrictions to counter a surge in COVID-19 cases.
Japan is poised to expand emergency restrictions to more prefectures, while China, the world’s second-largest oil consumer, has imposed restrictions in some cities and cancelled flights, threatening fuel demand.
Brent crude oil futures dropped by 38 cents, or 0.54%, to $70 a barrel by 0837 GMT after dipping below that threshold for the first time since July 21.
U.S. West Texas Intermediate (WTI) crude futures fell by 34 cents, or 0.5%, to $67.81. Both benchmarks fell by more than $2 a barrel on Wednesday.
“China is now facing its most challenging COVID-19 crisis since the initial outbreak was brought under control.
“The COVID-19 resurgence and the reimposition of restrictions will have negative repercussions on domestic transport fuel demand in the near term”, analysts at consultancy FGE said in a note on Thursday; adding that FGE expects gasoline demand to average about 80,000 barrels per day (bpd) less in August than in July.
In the United States, the world’s biggest oil consumer, COVID-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday, according to a Reuters tally.
Also weighing on prices was a surprise 3.6 million barrel build in U.S. crude stockpiles last week in data from the U.S. Energy Information Administration (EIA). [EIA/S).
