Economy

Oil drops as new coronavirus outbreaks raise fuel demand concerns

Oil drops as new coronavirus outbreaks raise fuel demand concerns”

U.S. West Texas Intermediate crude oil futures are trading slightly better on Friday after posting a steep sell-off the previous session.

Oil slumped on Monday, extending last week's losses, as new coronavirus infections hit China, Japan and the United States' increasing concerns that a resurgence of the virus could weigh on the recovery of fuel demand.

OPEC+ cut oil supplies by 9.7 million barrels per day (bpd), about 10% of pre-pandemic demand, and agreed last weekend to extend the reduction.

A few days back, Nigeria suggested that it would now fully comply with the OPEC agreement and would bring down its production.

Producers from the USA, as well as from the Organisation of the Petroleum Exporting Countries (Opec) and its allies, have been cutting supply, some by record amounts.

A rally that raised oil off April lows has come to a shuddering halt this week as the market faced the reality that the coronavirus pandemic may be far from over, with cases in the United States alone passing two million. "Adding to the bearishness is global markets believing that a second wave of contagion has begun in the USA and possibly China". Now it will have to compensate for the overproduction in addition to regular curbs.

More news: Berger beats Morikawa in sudden-death playoff at Colonial

While the production cut is coming closer to the estimated decline in the demand by OPEC, the market is now concerned about the demand, and indication concerning the global oil demand would dictate the price action going forward.

Recent efforts by OPEC and allies, which might not be working in the short-term, has now somewhat induced a fear related to the supply, which could be inferred from the U-turn witnessed in the CBOE crude market volatility index. The bank increased its 2020 average price estimates for both Brent and WTI by $4 a barrel to $41 and $37, respectively.

"It is not surprising then that the return of risk aversion, which hit stock markets hard yesterday, is also leading to profit-taking on the oil market", Eugen Weinberg, an energy analyst at Commerzbank Research, said in a note Friday. It has lost nearly 12% since closing at a three-month high on June 10.

Nevertheless, the update from the US Energy Information Administration (EIA) showed field production of crude narrowing to 11,100K from 11,200K in the week ending May 29, and the response by oil producers may continue to stabilize the energy market as US output falls to its lowest level since October 2018.

Fears that the coronavirus pandemic may be far from over has brought the rally to a halt, with about half a dozen USA states seeing a spike in new infections.



Like this

loading...
loading...

Latest


15 June 2020
Schauffele leads by one atop loaded Colonial leaderboard
Varner - who is African-American - added: "I just wanted to make that putt just to get me back to even [for the round]". After a bogey at 18, Varner closed with a flourish that started with a 31-foot birdie putt at the par-three fourth.

15 June 2020
Madeleine McCann suspect refuses to answer questions - police hail 'significant' evidence
He was revealed as the main suspect earlier this month, as German and United Kingdom police made a fresh appeal for help. Christian Brueckner is the prime suspect in the 2007 disappearance of British toddler Madeleine McCann .

15 June 2020
Beijing scrambles to curb resurgence of COVID-19
The city had also ordered testing for all of its workers and required anyone who traveled there to self-isolate for two weeks. Residents will have their temperatures checked and reported on a daily basis, and their food and daily necessities delivered.

15 June 2020
Barbra Streisand gifts Disney stock to George Floyd's daughter
Gianna posted a photo on her Instagram account holding her Disney shares certificate and thanked Streisand in the caption. Streisand's package to Floyd also included two of her studio albums, My Name Is Barbra and Color Me Barbra .

15 June 2020
Warzone 200-player BR and other new modes teased in Modern Warfare
Initially, prior to Warzone's announcement and release, there were rumors of the game supporting 200 players. With Season 4 launching on June 11, it's unlikely that these new modes show up within the next week or so.

15 June 2020
Ex-Rangers boss Warburton recalls trying to stop Gilmour from joining Chelsea
Loftus-Cheek has not made a senior competitive appearance for Chelsea since last season due to a ruptured Achilles sustained last May .

15 June 2020
Over 520,000 people infected with coronavirus in Russian Federation
Moscow , the country's worst-hit region, reported 1,477 newly confirmed cases, taking its tally of infections to 205,905. The death rate is 1.3% of all cases in Russian Federation , according to the crisis center.

15 June 2020
OSDH: 225 New Coronavirus Cases Across Oklahoma, 0 New Virus-Related Deaths
Two new cases of the coronavirus were reported in McLean County on Saturday, including one of the youngest patients seen to date. COVID-19 drive-thru testing site at Northeast Church of Christ in Oklahoma City on May 30.

15 June 2020
Tottenham defender Ben Davies relishing Manchester United clash on return
Tottenham fullback Ben Davies says they'll be going for the win against Manchester United for their season restart. We've been quite unlucky in terms of injured players.

15 June 2020
Coutinho begs Klopp, ready for pay cut for Liverpool return
Klopp could be tempted to move in for Coutinho after failing to land RB Leipzig's Timo Werner, who has agreed to join Chelsea . Joorabchian has repeatedly said Coutinho's preference is to return to the Premier League where he produced his best form.