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Mixed fortunes trail oil prices as covid-19 spike blights U.S. demand

Oil set for third weekly gain on China’s increasing demand, Brent gains 1.3%

Oil prices saw mixed fortunes on Monday as Brent crude advanced further, on the back of measured supplies while its counterpart U.S. benchmark, West Texas Intermediate (WTI) futures, fell amidst fears that an uptick in coronavirus infections could hurt demand in the U.S.

Brent crude racked up 38 cents or 0.89% at 07:01 West Africa Time (WAT) at $42.98 per barrel after a 4.3% gain in the week that just went by.

But WTI crude dropped by 8 cents or 20% to $40.42 per barrel from its previous settlement on Thursday.

U.S. markets did not open on Friday on account of July 4 Independence Day commemoration.

Meanwhile, Nigeria’s banner crude grade, Bonny Light leaped by 52 cents or 1.21% to $43.33 a dollar at the last session simultaneously with another national grade, Qua Iboe, which rose 50 cents or 1.18% $42.87.

Meanwhile, Nigeria’s banner crude grade, Bonny Light leaped by 52 cents or 1.21% to $43.33 a dollar at the last session simultaneously with another national grade, Qua Iboe, which rose 50 cents or 1.18% $42.87.

A Reuters tally demonstrated that, amidst galloping numbers of coronavirus cases in 39 states in the U.S., 15 states reported record rises in fresh cases in the first four days of July alone, with celebrations and parties during the holiday weekend possibly triggering another spike.

“There will be some kind of decline in demand if cases were to increase as people will stay at home. The pace of U.S. demand recovery will not be as steep as expected,” Howie Lee, an economist at Singapore’s OCBC bank said.

Read also: Oil prices advance on signs of economic rebound, Bonny Light up by 0.87%

ING bank’s analysts noted that data for several cities in affected states showed no reasonable decline in road traffic week-on-week at the moment.

“We will get a better idea of what impact tighter restrictions in several states have had on gasoline demand with the EIA (Energy Information Administration) report this week,” said ING in a note.

The subtle volatility for Brent crude LCOATMIV has touched its low since prices started plummeting in March as some in the market remain will not back down from cutting output as production by the Organisation of the Petroleum Exporting Countries (OPEC) crumbled to its lowest point in decades with Russian output to near targeted cuts.

OPEC and its ally group, jointly known as OPEC+, are determined to slash supply by an unprecedented 9.7 million barrels per day (bpd) for a third month in July. Cuts are set to go lower at 7.7 million bpd after this month until December.

Production in the U.S., which is the largest around the globe, is diminishing too. The number of U.S. oil and gas rigs dived to an all-time low for a ninth week even though the reductions are now at an arrested pace as higher oil prices encourage a couple of producers to start drilling again.

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