Oil Slides as Virus Cases Surge
Oil prices dropped on Monday in energy commodities with the rise in coronavirus cases. The surge has upset hopes for a smooth recovery in fuel demand. The main crude benchmarks were on track for their first monthly falls in multiple months after sliding last week.
Brent crude dropped 37 cents, or 0.9%, to $41.55 a barrel by 0652 GMT. This decline followed last week’s drop of 2.9%.
U.S. West Texas Intermediate was at $39.86 a barrel. It was down 39 cents or 1%, following a 2.1% decline last week.
Brent is falling for the first month in six while WTI is on track to its first monthly loss since April. The new travel restrictions in some countries dims the outlook on fuel demand recovery.
ANZ analysts said in a note, new COVID-19 case numbers are accelerating in major U.S. states. It is renewing fears of mobility restrictions challenging the ongoing oil demand recovery in the last quarter.
The global oil market has been stable for the past few months and the demand-supply balance restored. This was a statement from Russian Energy Minister Alexander Novak. There was also a warning of the risks of a second wave of COVID-19 cases.
Oil: Organization of the Petroleum Exporting Countries
Despite efforts by the OPEC+ to limit output, more crude is also being exported from OPEC producers Iran and Libya.
U.S. energy companies also added oil and natural gas rigs for a second week in a row. This was according to Baker Hughes on commodities last week.
Commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in Q1 of 2021. That would be before falling below that level for the rest of the year. This was a statement from OPEC Secretary General Mohammad Barkindo on Sunday.
According to ING analysts, one factor that may offer some support to the market is the prospect of strike action.
One of the largest oil producers outside OPEC is Norway. The Norwegian Oil and Gas Association (NOG) said on Friday, a workers’ strike might take place on Sept. 30. This strike is threatening to cut its production by 900,000 barrels per day.
Commodity news reported, one of the heaviest clashes between Armenia and Azerbaijan since 2016 broke out over the weekend. This reignites concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets.
Money managers raised their net long U.S. crude futures with options positions in the week to Sept. 22. This was a statement from the U.S. Commodity Futures Trading Commission (CFTC) on Friday.
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