Oil extended declines after swelling U.S. crude stockpiles and a surge in coronavirus cases across the nation raised concerns about demand in the world’s largest economy. Futures in New York slipped 0.6% to below $38 a barrel, after the biggest fall in almost two weeks on Wednesday. New infections reached daily records in Florida, California and Texas, where the governor said a “massive outbreak” is sweeping the state. U.S. gasoline futures tumbled the most in two months amid fears that lockdowns may need to be re-imposed.

Brent's prompt spread was in backwardation for just three sessions

The global economy is struggling to shake off the coronavirus, with the International Monetary Fund on Wednesday predicting a significantly deeper recession than it anticipated two months ago. American crude inventories have also risen for three straight week. These are making the job much tougher for OPEC and its partners as they push ahead with their record production cuts in an attempt to repair the market.

“If the economy doesn’t pick up, that will become a drag on crude oil demand just when OPEC+ has to make a decision about what to do next,” said Ole Hansen, head of commodities strategy at Saxo Bank. There’s a risk of a deeper correction for oil “if cracks should appear in the OPEC+ resolve to keep barrels off the market.”