As oil prices drop on Monday, rising coronavirus cases, and tensions between the US and China are driving investors away from oil.
Brent crude LCOc1 dipped 20 cents, or 0.5%, to $43.14 a barrel by 1000 GMT, while West Texas Intermediate (WTI) crude CLc1 dropped to $41.15 a barrel, down 14 cents, or 0.4%.
Following the closure of the consulates in Houston and Chengdu, the tensions between the two largest economies in the world increased, and the decline in Asian financial markets caused a drop in oil. Global coronavirus cases exceeded 16 million.
Brent is still heading for the fourth monthly earnings in July, and with rising prices due to supply cuts from the Organization of Petroleum Exporting Countries and its allies, including Russia, WTI is preparing to rise for the third month. However, production in the United States also fell due to demand concerns.
Oil demand improved in the second quarter, but the recovery path is uneven as the resumption of coronavirus-induced crashes in the U.S. and other parts of the world affected consumption.
Investors are also watching the effects of the storm Hanna, which shook the Texas coast during the weekend. Oil producers and refineries said on Friday that they did not expect the storm to affect the operations.
The recovery in oil prices improving from the low levels seen earlier this year encouraged producers to increase production. The number of U.S. oil rigs rose over the first week since March last week.