Tuesday, April 13, 2021
Home BUSINESS Economy Oil extends losses as coronavirus spike cools demand hopes

Oil extends losses as coronavirus spike cools demand hopes

Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading some countries to resume partial lockdowns that could hurt fuel demand.

Also read: Explained | Why are oil futures in negative terrain?

Brent crude dropped 83 cents, or 2%, to $40.19 a barrel by 10.26 A.M., while U.S. crude was at $37.69, down 80 cents, or 2.1%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The second wave contagion is alive and well,” Howie Lee, an economist at Singapore’s OCBC bank, said. “That is capping the bullish sentiment that we’ve seen in the last six to eight weeks.”

Other factors restricting oil prices’ advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs.

“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ analysts said.

Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.

“In the next one-two weeks, we should see an uptick in rig count commensurate with the pick-up in oil production,” OCBC’s Lee said.

Also read: Futures shock: On oil price fall below $0

Elsewhere, U.S. shale oil pioneer Chesapeake Energy Corp filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.

The Brent crude price is supported at $39.80 a barrel while WTI’s support level is at $37, OANDA senior market analyst Jeffrey Halley said, referring to technical charts.

“A daily close below these points will signal that a much deeper correction is upon oil markets,” he said, adding that a deteriorating COVID-19 picture in the United States would be the most likely driver of lower prices. (Reporting by Florence Tan; Editing by Sam Holmes, Kenneth Maxwell and Kim Coghill)

You have reached your limit for free articles this month.

To get full access, please subscribe.

Already have an account ? Sign in

Show Less Plan

Subscription Benefits Include

Today’s Paper

Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.

Faster pages

Move smoothly between articles as our pages load instantly.

Unlimited Access

Enjoy reading as many articles as you wish without any limitations.

Dashboard

A one-stop-shop for seeing the latest updates, and managing your preferences.

Personalised recommendations

A select list of articles that match your interests and tastes.

Briefing

We brief you on the latest and most important developments, three times a day.

*Our Digital Subscription plans do not currently include the e-paper ,crossword, iPhone, iPad mobile applications and print. Our plans enhance your reading experience.

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Indian Staffing Market will be the largest market in the world, today the industry is an over 6 billion dollar industry, says Mr Sultan...

Mumbai: According to Mr Sultan Khan, Founder & Director of EaseConnect HR Services Pvt. Ltd. Indian Staffing Market will be the largest market in...

HSE Interview Questions & Answers

What is Safety? The condition of being protected from or unlikely to cause danger, risk, or injury is Called Safety. What is the accident? It is an...

Putham Pudhu Kaalai trailer: Five Tamil filmmakers bring five stories of love in the time of Covid-19

The trailer of Amazon Prime’s upcoming Tamil film Putham Pudhu Kaalai was unveiled on Monday by filmmaker Mani Ratnam and composer A.R Rahman. Tamil...