Oil fell more than 2% on Monday. New coronavirus infections hit China and the United States and extended losses over the past week. And it also increased the likelihood that renewed virus outbreaks would hinder fuel demand recovery.
Brent crude futures fell 89 cents, or 2.3%, to $37.84 a barrel by 03:02 GMT, while West Texas Intermediate (WTI) crude futures were down $1.18, or 3.3%, to $35.08 a barrel.
A cluster of coronavirus infections found in Beijing raised the anxiety of disease revival.
As cases of the US coronavirus began to increase, the two oil benchmarks (Brent, WTI) fell by about 8% last week, the first weekly fall since April. Over the weekend, more than 25,000 new US cases were reported on Saturday alone, and many states reported record numbers of new infections and hospitalizations.
It is obvious that the recovery in oil demand will be a long process. The new wave of cases has raised concerns that a recovery in demand may take longer than initially thought.
Industrial production in China, the world’s largest crude oil importer, rose for the second consecutive month in May, but the rise is lower than expected. This shows that the world’s second-largest economy has a hard time coping with a new wave of coronavirus.
According to official data, the country’s refineries increased its production volume in May by 8.2% over the same period of the previous year, to 13.6 million barrels per day (bpd).
According to five OPEC + sources, an OPEC-led monitoring panel will meet on Thursday to discuss the ongoing record cuts and whether countries are doing their part in discounts, but they will not take any decisions.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies known as OPEC + cut the supply by 9.7 million bpd, reducing approximately 10% of pre-pandemic demand and agreed to extend the cuts by one month by the end of July.
Iraq, which caused delays in alignment cuts, agreed with major oil companies to further reduce crude production in June. The country’s oil minister said he would later export an average of 2.8 million bpd in June.