Oil prices weakened on Monday, extending the losses recorded the week before as fresh coronavirus infections hit China, United States and Japan, worsening fears that a resurgence of the pandemic might impact fuel demand rebound negatively.
Nigeria’s banner crude grade, Bonny Light, had gained 1 cent or 0.03% at the last session to close at $37.87 a barrel. But Qua Iboe, another major grade, declined by $2.56 or 6.35 to $37.78 per barrel.
“The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought,” said Warren Patterson, ING’s Head of Commodities Strategy.
After roughly two months with no new cases, officials in Beijing have recorded 79 coronavirus infections in the past four days.
U.S. coronavirus cases also started to rise. Over 25,000 fresh U.S. infections were reported on Saturday alone as more states recorded new cases and hospitalisations.
Economic data from China are also not promising. China’s industrial output grew by 4.4% in May from a year earlier but the gain was lower than anticipated, implying that the world’s second-biggest economy is still striving to get back on track.
Chinese refineries’ throughput in May grew by 8.2% from the same period last year to around 13.6 million barrels per day (bpd).
“Overall, with oil supply flowing in a more or less expected path, demand will now be the key price mover,” said Rystad Energy’s Head of Oil Markets, Bjornar Tonhaugen.
An OPEC-led monitoring team will meet Thursday to discuss ongoing record output cuts and see whether countries have delivered their quota of the reductions.
Iraq, one of the laggards in complying with the production cuts, agreed with its major oil companies to slash crude output further in June, Iraqi officials working at country’s giant southern oilfields told Reuters on Sunday.
- MTNN half-year revenue rises, helped by data income, but soaring costs hurt profit - July 30, 2020
- Nigerian manufacturing sector shrinks for the third straight month in July –CBN - July 30, 2020
- NIPOST’s courier license fees hike shows govt could be creating an austerity worse than the pandemic - July 30, 2020