WTI extends Thursday’s drop as virus cases rise

• Oil extends overnight sell-off as virus concerns dominate the market sentiment. 
• The resurgence of virus cases in the US has fueled lockdown fears. 

West Texas Intermediate (WTI) crude, a North American oil benchmark, dropped 0.40% to $39.58 during Friday’s Asian trading hours, extending Thursday’s 3% decline on concerns that the US, the largest economy in the world, may have to reimpose lockdown to contain the resurgence in coronavirus cases. 

The US on Thursday registered 65,551 new coronavirus cases, a record for a 24-hour period, according to a tally by Johns Hopkins University. The previous daily record of 60,200 cases was registered on Tuesday.

There has been a notable rise in the number of cases in states of Arizona, Texas, Florida, Georgia, and South Carolina over the past week or two and the resurgence has stalled the recovery in retail consumption. 

According to Goldman Sachs, hospital capacity in Arizona, Texas, and Florida is being filled up with cov1 COVID-19 patients and eventually, state officials will be forced to consider additional measures. 

If lockdown restrictions are reimposed, the US fuel consumption would again take a hit, causing a weakening of demand-side pressures in the oil market. 

The black gold fell sharply in April with front-month futures falling below zero for the first time on record as coronavirus-induced lockdown across the globe filled up storage tanks. 

Technical levels