Wednesday May 13, 2020
SINGAPORE: Oil prices fell on Wednesday after the US government's top infectious disease expert warned that ending lockdowns in the world's biggest economy too soon could trigger fresh coronavirus outbreaks.
Anthony Fauci's remarks before a US Senate panel put a damper on President Donald Trump's efforts to reopen the virus-hit American economy, the world's top oil consumer.
US benchmark West Texas Intermediate (WTI) for June delivery was down 1.36% at $25.43 a barrel in morning Asian trade.
Global benchmark Brent crude for July was trading 1.4% lower at $29.56 a barrel.
Both contracts, which were hammered last month as demand evaporated due to virus lockdowns, had risen Tuesday after Saudi Arabia announced further output cuts.
"The road to recovery hit a massive pothole," AxiCorp global market strategist Stephen Innes said, referring to Fauci's testimony.
"While the market feels more comfortable on the supply side of the equation, on the demand side, the focus will continue to revolve around the risks of easing lockdowns or even the extensions.
"In his first appearance on Capitol Hill in two months, Fauci delivered a cautionary message at odds with Trump's push to reopen the economy soon.
The respected scientist warned of "serious" consequences if states lifted lockdowns without following safety guidelines developed by federal authorities.
"There is a real risk that you will trigger an outbreak that you may not be able to control," he added.
Analysts said however that signs the virus-triggered supply glut was easing would continue to provide some support to markets.
Top crude producers led by the OPEC cartel continue "to signal a willingness to do what is necessary to stabilise the oil price, and that should limit downside", Innes said.
Producers have already struck a deal to cut output by almost 10 million barrels a day to boost prices.