Oil prices sank further on Tuesday amidst concerns that new curbs to forestall exploding coronavirus infections in the United States and Asia could put fuel demand recovery in limbo just as OPEC+ producers brace up to expand supply from August.
Brent crude futures was 26 cents or 0.61% down at $42.46 per barrel by 11:05 West African Time and U.S.’ West Texas Intermediate (WTI) crude futures dipped by 28 cents or 0.70% to $39.82. The two benchmarks lost a little more than 1% at the previous session.
California, U.S. most populous state and biggest state economy, was ordered by its governor on Monday to close bars and suspend movie theatres, restaurants, zoos and museums indoor operations over an upsurge in the virus’ spread.
California’s decision is coming on the heels of the latest restoration of a number of restrictions in states like Florida and Texas. Asia and Australia have similarly imposed new limitations.
Markets are on tenterhooks to receive the decision of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, jointly know as OPEC+ on proposed output cuts.
The Joint Technical Committee of OPEC meets on Tuesday to deliberate on the plan while the Joint Ministerial Monitoring Committee will hold its own conference Wednesday.
OPEC+ is on course to whittle down its record output cut of 9.7 million barrels per day to 7.7 million between August and December.
The oil market is approaching a symmetry as demand improves, OPEC’s secretary general said on Monday.
China, the world’s biggest oil importer, reached both its daily and monthly highs for imports in June, data showed on Tuesday.
Citibank analysts believed the impending supply increase could impact prices taking into consideration demand uncertainties.
Morgan Stanley said oil demand was unlikely to climb past pre-pandemic levels until late 2021.
The market will equally be on the lookout for fuel consumption statistics to be issued on Tuesday from the American Petroleum Institute industry group and on Wednesday from the U.S. Energy Information Administration.
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