The record increase in coronavirus infections around the world stops the recovery in fuel manufacturers, requiring larger producers concerned to take tighter supply measures.
Brent crude LCOc1 fell 10 cents, or 0.2%, to $42.04 a barrel by 0655 GMT, while WTI crude CLc1 was at $39.72 a barrel, down 11 cents, or 0.3%.
Both contracts rose about 9% last week, and Brent crude oil futures turned into backwardation (the difference between the two prices when the near-term price was lower than the futures). In this case, which is an indication that the supply is tightening, urgent delivery costs are higher than what will be provided later.
The market entered a slight downtrend until October. According to some estimates, it is thought that the market can really tighten by November. At this point, oil is struggling to climb higher, especially with increasing concern about second wave of the virus.
In Canada and the United States, despite some producers started drilling again with rising oil prices, , the number of oil and gas extraction facilities dropped to a record level last week.
The OPEC + group, including the Organization of the Petroleum Exporting Countries and its allies, Russia, has not yet decided whether to extend the record supply cut of 9.7 million barrels (bpd) per day for the fourth month in August.
However, Iraq and Kazakhstan pledged to comply much better with oil production cuts at an OPEC + panel held on Thursday.
Oil prices were supported by an improvement in fuel demand globally after the collapse in April-May during virus closings, as countries around the world continue to operate economically.
Still, the World Health Organization posted a record increase in global infections on Sunday, and the biggest increase was seen in North and South America.
Sudden increases in virus infections in some regions, such as China’s capital city Beijing and the second most populous state of Australia, Victoria, invites taking reapplying the restrictions into consideration to limit spreading.