Crude oil rates fell on Wednesday, extending losses in the previous session, amid rising cases of the coronavirus pandemic in several countries. Brent crude futures were last seen trading 0.83 per cent lower at $39.45 per barrel, having moved within a range of $39.37-39.87 per barrel earlier on Wednesday. The contract dropped below the $40-a-barrel mark for the first time since June 15. West Texas Intermediate futures were down 1.01 per cent at $36.39 per barrel at the time.
The Intercontinental Exchange (ICE)’s Brent futures are considered a benchmark for global oil markets, besides the New York Mercantile Exchange (Nymex)’s WTI crude futures.
COVID-19 cases continue to rise in India, Great Britain, Spain and several parts of the US, where the infection rate has not come under control for months.
The pandemic has dashed hopes for a fast global economic recovery that could impact demand for fuels from aviation gas to diesel.
Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have helped support prices. However, the outlook for oil demand remains bleak, with grim economic figures being reported almost daily.
“Crude has slipped to mid-June lows as the selloff in equity markets and gains in the US dollar are coupled with rising OPEC production and signs of weaker demand in the physical market,” said Ravindra Rao, VP-head commodity research at Kotak Securities.
“Crude may remain under pressure unless US equity markets stabilize or we see sharp drop in US crude stocks,” he added.
At the current levels, Brent crude is down around 40 per cent so far this year. In April, the contract had hit a 21-year low of $15.98 per barrel as the COVID-19-triggered lockdowns hampered global oil demand.
State-run oil marketing companies kept domestic petrol and diesel rates unchanged on Wednesday. In Delhi, the price of petrol was maintained at Rs 82.08 per litre and diesel at rs 73.16 per litre, according to notifications by Indian Oil Corporation.
India is the world’s third largest importer and consumer of crude oil.