U.S. oil futures traded lower Thursday as worries about rising cases of COVID-19 worldwide resurface, with parts of Europe implementing or planning to reinstitute new social-distance restrictions amid a flareup of the contagion.
Crude oil investors have closely followed the spread of the disease because it can have a detrimental impact on appetite for oil as economies stall.
New rules in Spain mean that a majority of the country’s regions will limit public service and retail to 50% capacity, while France may introduce new restrictions on Thursday night. Per person, Spain, France and the Netherlands have the highest rate of new cases over the last seven days of the world’s largest countries, according to data tabulated by Deutsche Bank.
On top of those possible drags in oil sentiment, supplies are percolating higher. A recent survey by Reuters pointed to increased oil supply from the Organization of the Petroleum Exporting Countries, with output in September up 160,000 barrels per day from August.
On Wednesday, oil prices suffered their first monthly decline since April.
West Texas Intermediate crude for November delivery shed 71 cents, or 1.8%, to reach $39.50 a barrel on the New York Mercantile Exchange, following a 2.4% gain on Wednesday. Prices based on the front-month contracts saw monthly fall of 5.6%, but ended 2.4% higher for the quarter, according to Dow Jones Market Data. They had posted gains in each of the last four months.
The December Brent crude contract, which became the front month at the end of the session, shed 63 cents, or 1.5%, at $41.67 a barrel.
Losses on Thursday came even after the Energy Information Administration reported Wednesday that U.S. crude inventories fell for a third straight week, down by 2 million barrels for the week ended Sept. 25. That compared with an average climb of 1.9 million barrels expected by analysts polled by S&P Global Platts, while the American Petroleum Institute on Tuesday had reported a fall of 831,000 barrels.
Investors also were watching developments between U.S. lawmakers over a possible new round of coronavirus stimulus, which could also provide a potential lift to the energy sector, providing funding to out-of-work Americans and troubled businesses.