Just days ahead of Guyana lifting its third million-barrel oil cargo, Reuters said in a report on Wednesday oil prices rose to their highest since early March after U.S. crude inventories fell sharply and the dollar weakened. However, mounting coronavirus infections had investors worried about the demand outlook.
Brent crude ended the session up 74 cents, or 1.7%, at $45.17 a barrel, while West Texas Intermediate oil settled 49 cents, or 1.2% higher, at $42.19 a barrel. Both contracts gained over 4% earlier in the session, Reuters stated in the report.
Guyana will export another 1 million barrels of oil from the Liza Destiny FPSO this weekend, with the oil tanker, Norwegian flag-carrier SKS SPEY, already in a waiting area ahead of the country’s 3rd lift.
Guyana’s first million-barrel oil cargo was sold at around US$55 per barrel and the second lift at approximately US$35 per barrel.
Rising prices come against the backdrop of a surge in coronavirus cases which could threaten a recovery in fuel demand, the Reuters report stated.
Global coronavirus deaths surpassed 700,000 on Wednesday, according to a Reuters tally, with the United States, Brazil, India and Mexico leading the rise in fatalities.
“We see gasoline demand coming in close to 7% year-on-year lower through Q3, with gasoil/diesel registering a decline of some 4%, implying a continued slowdown of the recovery, with a global return to 2019 levels this year increasingly in doubt,” JBC Energy said, referring to global consumption, which has collapsed due to lockdowns to help contain the pandemic.
The consultancy sees jet fuel demand down 50% year on year through the third quarter.
In the United States, the world’s top oil consumer, distillate inventories rose last week to their highest in 38 years for the third week in a row, while Gulf Coast distillates were at record high levels, the EIA said. Gasoline stocks rose for a second straight week.
“As we approach the end of the driving season and enter into the fall heating oil season, refining margins are going to remain under pressure as gasoline and distillate inventories remain substantially above last year and we have been unable to cut into that overhang in a meaningful way,” said Andrew Lipow, president of Lipow Oil Associates in Houston, Reuters reported.