Worries over economic fallout from COVID-19 cap gains in oil price
… Nigeria economic, growth recovery programme suffers setback
Worries over the economic fallout from the coronavirus pandemic capped gains in crude oil prices. Oil prices held steady on Wednesday despite signs of improving demand and a drawdown in US crude inventories. Brent crude futures for July delivery were up 10 cents, or 0.3 percent, at $34.75 per barrel at 0626 GMT. US West Texas Intermediate (WTI) crude futures for July were down 2 cents at $31.94 a barrel after closing up 1 percent in the previous session. The June contract expired on Tuesday at $32.50 a barrel, up 2.1 percent, as the WTI futures market avoided the chaos of last month’s May expiry, when prices sank below zero. Oil prices have mainly risen during the past three weeks, with both benchmarks climbing above $30 for the first time in more than a month on Monday, supported by massive output cuts by major oil producing countries and signs of improving demand. US crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from industry group the American Petroleum Institute (API) showed on Tuesday. Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the US eases its lockdowns. “Oil markets have worried about high crude inventories but yesterday the WTI June contract expired and rolled over to July smoothly as concerns over crude stocks ease and demand has improved in the short-term,” said Kim Kwang-rae, commodity analyst at Samsung Securities in Seoul. Asia’s gasoline profit margins GL92-SIN-CRK turned positive on Tuesday for the first time in nearly two months, giving hope to global oil refiners. But lingering concerns about the economic fallout from the coronavirus pandemic, especially in the US, which is the world’s biggest oil consumer, kept a lid on prices. US Federal Reserve chair Jerome Powell said on Tuesday layoffs by state and local governments would slow the US economic recovery. The slowdown in the global economy and lockdown in most countries as a result of COVID-19 have also taken its toll on the global demand for oil. The decline in oil demand is estimated to surpass the loss of nearly 1 million barrels per day during the 2007-08 recession. This is also coming at a time when two key players in the global oil industry – Russia and the OPEC cartel – are at loggerheads on the decision to cut output. The unequivocal oil price war started between these two global oil market giants has more dire consequences on oil prices.