Oil declines further amid anticipated resurgence of coronavirus
Oil slumped on Monday further extending the losses of last week as new cases of coronavirus hit China, Japan and the United States thus, increasing concerns that the virus resurgence could affect the recovery of fuel demand.
Brent crude futures fell $1.32 (3.4%) to $37.41 per barrel around 0716 GMT, while U.S. West Texas Intermediate crude futures were down $1.75 (4.8%) to $34.51 per barrel.
Broader financial markets also slumped on Mondays as they were reports of new infection cases in China which seemed to have increased investors risk-off sentiments.
The oil benchmark fell about 8%the previous week, and this is their first weekly decline since April as U.S. COVID-19 cases start increasing. More than 25,000 cases were reported in the U.S just over the weekend.
Avtar Sandu, senior Manager commodities at Philips Futures in Singapore said, "Confirmed cases of the virus have continued to rise with increasing number of deaths, reflecting a continuing scenario which would keep global growth and energy demand constrained".
Japan too reported about 50 new cases in Tokyo on Monday with 47 of the cases being reported on Sunday according to local media. This is the highest number since early May
In China, the world's biggest importer of crude oil, industrial output was reported to have increased for the second consecutive month. Still, the increase was smaller than expected; thus, suggesting that the restoration of the world's second-biggest economy will be intermittent.
However, refineries in the country were still able to increase their output in May by 8.2%, which is more than the same period last year to about 13.6 million per barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+ have been reducing supplies by 9.7 million bpd, about 10% of demand before the pandemic and in early June, it agreed to extend the cuts for a month until July end.
Iraq, which usually hangs back when it comes to complying with the curbs agreed with its major oil companies to cut production further in June, according to Iraqi officials working at the fields. The nation's oil minister later said it would export an average of 2.8 million bpd in June.
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