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Crude oil prices plunged sharply on Thursday as reports showing a resurgence in coronavirus cases raised possibilities of another lockdown and a likely drop in energy demand.
A weak economic outlook from the U.S. Federal Reserve after the conclusion of its monetary policy meeting yesterday, when it also said interest rates will likely remain near zero percent through 2022, further weakened sentiment in the oil market.
The Fed projected U.S.' real GDP to nosedive by 6.5% in 2020, as the ongoing public health crisis weighs heavily on economic activity.
West Texas Intermediate Crude oil futures for July ended down $3.26 or about 8.2% at $36.34 a barrel, suffering their biggest single-session loss in more than six weeks.
Brent crude futures declined $3.22 or 7.7% at $38.51 a barrel.
Wednesday's data from the Energy Information Administration (EIA) which showed an increase in crude inventories in the U.S. last week hints at a possible decline in energy demand in the country.
Recent data on the virus outbreak has led to worries about economic reopening leading to a spike in infections. According to data CNN aggregated from the Covid Tracking Project, the number of coronavirus hospitalizations in the U.S. since Memorial Day has risen in at least a dozen states. Texas reported 2,504 new coronavirus cases on Wednesday, reflecting the highest one-day total in the state since the pandemic emerged.
The number of confirmed coronavirus cases in the U.S. has also passed the two-million mark, according to data from Johns Hopkins University.
