Oil prices fell on Monday. Brent fell from a five-month high, global demand remained below pre-COVID-19 levels and U.S. production soared.
Brent crude futures settled at $45.28 a barrel, down 53 cents, or 1.2%. West Texas Intermediate (WTI) crude CLc1 settled at $42.61 a barrel, down 36 cents, or 0.8%.
Brent still closed out August up 7.5% for a fifth successive monthly price rise. West Texas Intermediate (WTI) logged a fourth monthly gain at 5.8% after hitting a five-month high of $43.78 a barrel on Aug. 26 when Laura struck.
Nonetheless, analysts say the market may remain in excess fuel supply, with locked economies around the world loosely recovering from the coronavirus. Problems with demand are not yet showing any real signs of improvement.
U.S. oil production is said to climb 420,000 barrels a day to 10.44 million barrels a day in June, putting more pressure on prices. Oil production on the US Gulf Coast was lower as energy companies continued their efforts to shut down platforms and refineries before two hurricane broke out last week.
There are still concerns about the lagged effects of Hurricane Laura and what it will mean for refinery operations, what impact it will have on demand and exports. Some oil reserve fields were significantly damaged by Laura, although not as much as expected.
Analysts say Germany’s slightly improved forecast for 2021 growth and a survey showing China’s strength in the service sector on Monday support oil prices, but forward-looking barriers to crude oil remain.
Meanwhile, China’s crude oil imports in September are expected to decline for the first time in five months, storing a record amount of crude oil inside and outside.