Oil prices extended their losses today, with WTI back below $47 at its lowest in a week, as fears of a rapidly spreading COVID strain struck fear in the vaccine-hopers expecting a return to normal.

“This sudden, panicked action by government around the world points to the risk of even more widespread lockdowns and travel restrictions well into the new year,” said Pavel Molchanov, energy research analyst at Raymond James & Associates Inc.

“Needless to say, that will slow down the recovery in global oil demand and is weighing on oil prices.”

For now, all eyes will be on tonight's inventory data and implied gasoline demand tomorrow for a sense how US lockdowns have impacted the energy complex domestically.

API

• Crude +2.70mm (-3.1mm exp)
• Cushing +341k
• Gasoline -224k (+600k exp)
• Distillates +1.03mm (-1mm exp)

Analysts expected a 6th straight week of gasoline builds (but did not get one), and after the week before last's huge build, crude stocks are expected to draw down (but instead crude stocks saw a build)...

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Source: Bloomberg

WTI was hovering back below $47 ahead of the API print, and extended losses after the surprise build...

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The threat to near-term demand from additional stay-at-home measures has rippled across oil markets. 

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Brent contracts for prompt delivery are back at a discount against later deliveries -- a bearish pattern known as contango.