On Thursday, oil prices fell on the concerns over the disadvantageous demand recovery outlook as coronavirus cases rise, combined with the all-time high of US crude inventories and US central bank estimates that economic recovery could take years.
By 06.00 GMT, Brent crude oil futures slumped by 3.4% or USD1.42 to USD40.31/barrel, eliminating the increases gained yesterday. Earlier in the day, the level was down by 3.7% or USD1.53.
US WTI also slid down by 4% orUSD1.60 to USD38/barrel, after posting a 4.3% fall or USD1.69.
The Energy Information Administration announced the record-high US crude oil inventories, causing the market to panic. Stockpiles unexpectedly surged by 5.7 million barrels last week to 538.1 million barrels as imports were strengthened by refiners in March and April.
Analyst Jeffrey Halley said that most of the increase came from Saudi Arabia and it would be transitory. However, outlooks seem to be vulnerable to oil.
Gasoline inventories rose to 258.7 million barrels while distillate stockpiles gained 1.6 million barrels.
Analyst Vivek Dhar of Commonwealth Bank predicted that the return of the prices to the level pre-coronavirus would take some time.
Weighing the prices down was the US Federal Reserve’s prediction that the economy could shrink by 6.5% in 2020, with an unemployment rate of 9.3% at the end of this year.
Adding to the negative sentiment was the number of US coronavirus cases which have hit the 2 million marks on Wednesday, with new infections rising slightly after five weeks of declines.
