Oil prices dipped on Wednesday, a fifth day of declines with investors wary about prospects for stronger fuel demand as the use of rail, air and other forms of transport remained constrained amid surging COVID-19 cases worldwide.
Brent crude was down 5 cents or 0.1% at $68.98 a barrel by 0139 GMT, having fallen 0.7% on Tuesday. U.S. oil lost 6 cents or 0.1% to $66.53 a barrel after dropping 1% in the previous session.
”July oil demand looks pretty weak because of China’s industrial and retail slowdown, the floods there, as well as severe port congestion and a government clamp-down on the import quote of private refiners,” Henning Gloystein, energy director at Eurasia Group, said in a note.
”In India, the economic fallout of the severe Covid-19 outbreak earlier this year still weighs on the economy and consumer travel behaviour,” he added.
India, the world’s third-biggest crude importer, also started sales of oil to state-run refiners from its Strategic Petroleum Reserve (SPR), putting in practice a new policy to commercialize federal storage by leasing out space.
A stronger dollar was also hitting commodities across the board, with metals and precious gold in particular as ”equally fragile” as oil, ANZ Research said in a note.
Crude is typically priced in dollars so a pricier Greenback makes oil more expensive, hitting demand.
In the United States, more supply is set to hit the market if official forecasts prove right.
U.S. shale oil production is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020, according to the government’s Energy Information Administration’s monthly drilling output report.