NEW YORK: Oil prices fell over 4% on Wednesday as surging coronavirus infections in the United States and Europe are leading to renewed lockdowns, fanning fears that the unsteady economic recovery will deteriorate.
The decline mirrored downturns in other risk-asset markets, as U.S. stock indexes were all lower, with the S&P 500 index down 2.7%.
The United States, Russia, France and other countries have registered record numbers of COVID-19 cases in recent days and European governments have introduced new curbs to try to rein in the fast-growing outbreaks.
“Crude oil is under pressure from the increase in COVID-19 cases, especially in Europe,” said Robert Yawger, director of energy futures at Mizuho in New York.
Brent futures fell $1.91, or 4.6%, to $39.29 a barrel by 10:47 a.m. EDT (1447 GMT), while U.S. West Texas Intermediate crude fell $2.05, or 5.2%, to $37.52.
Earlier in the day Brent traded to its lowest since Oct. 2 and WTI its lowest since Oct. 5.
Futures pared losses somewhat after the U.S. Energy Information Administration (EIA) said a bigger-than-expected 4.3 million barrels of crude oil was put into storage last week, but slightly less than industry data late Tuesday which showed a 4.6 million-barrel build. [EIA/S] [API/S]
However, crude production surged to its highest since July at 11.1 million barrels per day in a record weekly build of 1.2 million bpd, the data showed.
Gasoline demand has also been weak overall, down 10% from the four-week average a year ago. U.S. consumption is recovering slowly, especially as millions of people restrict leisure travel with cases surging nationwide.
(Additional reporting by Noah Browning in London and Yuka Obayashi in Tokyo; Editing by Marguerita Choy and David Goodman)
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