Oil prices snap four-day winning streak as COVID-19 cases grow

August 05, 2020: Oil prices fell for the first time in four days on Wednesday, slipping from as much as five-month highs as mounting coronavirus cases worldwide and in the United States undercut market confidence about a potential pickup in fuel demand.

Brent crude was down 4 cents, or 0.1%, at $44.39 a barrel by 0449 GMT. It finished 0.6% higher on Wednesday – the highest close since March 6.

West Texas Intermediate oil was down 8 cents, or 0.2%, at $41.62 a barrel. The contract ended Tuesday trading 1.7% higher, its highest close since late July.

Coronavirus cases continued to rise in the United States, and deaths are at more than 1,000 a day, while dozens of states have had to pause or scale back plans to reopen their economies.

Still, a big fall in U.S. inventories of crude oil provided a bottom to prices.

Crude inventories were down by 8.6 million barrels in the week to Aug. 1 to 520 million barrels, compared with analysts' expectations for a drop of 3 million barrels. [API/S]

Official figures from the U.S. Department of Energy are due out later on Wednesday.

It would be safe to say that U.S. crude oil inventories are in a firm downward trend,” if the official numbers confirm last week’s drop, ING Economics said in a note.

Helping support sentiment were signs that talks between Democrats in Congress and the White House on a new package of coronavirus relief started moving in the right direction, although the two sides remain far apart.

U.S. factory data this week also showed an improvement in orders, which some analysts saw as offering relief to concerns about risks to any recovery.

Japan’s services sector contracted for a sixth consecutive month in July, data showed on Wednesday, suggesting activity in the world’s third-biggest economy and fourth-biggest oil importer remained under pressure from the coronavirus pandemic.

Reuters

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