New York City (Reuters) – Oil prices fell on Monday as investors fretted about a 2nd wave of coronavirus infections, however new output cuts from Saudi Arabia tempered worries about oversupply and limited cost losses.
SUBMIT PHOTO: The sun sets behind a petroleum pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24,2019 Photo taken November 24,2019 REUTERS/Angus Mordant/File Photo
Brent crude futures fell $1.04, or 3.4%, to $2993 a barrel by 12: 58 p.m. EDT (1658 GMT). U.S. West Texas Intermediate (WTI) crude fell 30 cents, or 1.2%, to $2444 a barrel.
International oil demand has plunged by about 30%as the coronavirus pandemic has reduced motion across the world, resulting in growing inventories globally. While unrefined futures have actually fallen more than 55%this year due to the fact that of the virus, rates have acquired the previous two weeks, supported by a modest rebound in demand as some travel restrictions are alleviated.
Nevertheless, fears about a 2nd wave of the infection weighed on futures.
Germany reported on Monday that new coronavirus infections were accelerating tremendously after early actions to reduce its lockdown. Somewhere else, Wuhan, the epicentre of the break out in China, reported its first cluster of infections considering that the city’s lockdown was lifted a month back.
South Korea also warned of a 2nd wave of the virus on Sunday.
” Traders went back from recently’s enthusiasm, pondering the possibility of a 2nd wave of the epidemic, which, if realised, might drive demand lower than the market hopes and anticipates for the 2nd half of 2020,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
Prices received an increase, nevertheless, after a Saudi energy ministry official said the ministry has actually directed national oil company Saudi Aramco to decrease its crude oil production for June by an extra 1 million barrels daily.
The reduction is on top of a pact by the Organization of the Petroleum Exporting Countries (OPEC) and allied manufacturers – a group known as OPEC – to cut production from May 1 by about 10 million bpd in an effort to support costs.
” It’s a balance between OPEC production cuts versus concerns about the possibility of a 2nd wave of coronavirus,” said Phil Flynn, senior expert at Cost Futures Group. “It’s those two feelings that have been bouncing the marketplace back and forth today.”
In the United States, fears that the country is running out of oil storage area sent WTI prices into negative area last month, prompting some U.S. producers to check output.
The variety of operating oil and gas rigs in the world’s largest oil manufacturer recently was up to 374, a record low according to information returning to 1940 from energy services business Baker Hughes Co.
GRAPHIC: Shutting off the taps – here
Extra reporting by Bozorgmehr Sharafedin in London, Florence Tan in Singapore and Devika Krishna Kumar in New York; Modifying by Marguerita Choy and Nick Zieminski