Oil prices dropped on Monday as steep spikes in new global coronavirus cases drove some countries to resume partial lockdowns, heightening fears about the pace of economic rebound and demand for fuel.
Nigeria’s chief crude grade, Bonny Light shed 33 cents or 0.81% to close at $40.37 per barrel at the last session. However, another major national grade, Qua Iboe, $1.06 or 2.64% to close at $41.21 a barrel.
“Both contracts (Brent and WTI) are coming under stronger pressure this morning as the spectre of lockdowns returns,” said JBC Energy.
Death toll from the coronavirus pandemic climbed past half a million people on Sunday, according to a Reuters tally.
Nations like the United States, India and Brazil are seeing a new wave of infections, prompting authorities to partially reintroduce lockdowns, in what analysts say could be a recurring trend in the coming months and into 2021.
“Looking ahead, anxiety is likely to remain heightened as the epic fight against the coronavirus pandemic continues. This spells bad news for risk assets (such as oil) which will inevitably remain under pressure,” Stephen Brennock of oil broker, PVM said.
Experts said oil prices were also facing pressure from poor refining margins and large stockpiles.
Brent is on its way to end June with a third straight monthly gain after major producers extended a record 9.7 million barrels per day output cut deal into July while oil demand increased after countries around the world relaxed lockdown measures.
U.S. as well as Canadian energy firms have scaled down the number of oil and natural rigs operating to a new unprecedented low even as higher oil prices lead some producers to start drilling again.
Eugen Weinberg, analyst at Germany’s Commerzbank, said “no massive investments are likely to be made in the foreseeable future given the gigantic mountains of debt and the considerable financial risks.”
U.S. shale oil pioneer, Chesapeake Energy Corp, filed for bankruptcy protection on Sunday as it bowed to heavy debts and the weight of the coronavirus outbreak on energy markets.
Investors will be awaiting economic data this week that will indicate the shape of economic recovery.
Inflation data from the euro zone’s biggest economy, Germany, is expected to be released later on Monday. In the United States, ISM manufacturing index is expected on Wednesday and payrolls on Thursday.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
ICYMI…SPECIAL REPORT: NNPCL hides behind PIA to frustrate disclosure, accountability
Nigeria’s major oil company, Nigerian National Petroleum Corporation Limited (NNPCL), in what appears to be a common practice of disregard...
INVESTIGATION: Multi-million naira Ekiti resort center remains uncompleted a decade after
The multimillion-naira project, expected to comprise recreational buildings, now consists of cassava farmland, a bush used for excretion, and a...
SPECIAL REPORT: Torturous experiences of students with disabilities in Oyo tertiary institutions
For students with disabilities in Oyo state-owned tertiary institutions, learning is a torturous and distressing experience, considering the building structures...
INVESTIGATION: Uncompleted Old Enugu-Onitsha Road brings untold hardship, tears to commuters, residents of Enugu communities
Ugwu Obinna’s younger sister was killed after a truck driver transporting cows rammed into her shop located at the Okpatu...
INVESTIGATION: Students sit on floors, under leaking roofs as multi-million naira project is nowhere to be found in Zamfara
Suleman Tukur, 15, an SS 2 student of Government Day Secondary School (GDSS) Bakura in Bakura local government area of...