Oil prices fell for the second consecutive time on Monday, as coronavirus cases rose in the United States and elsewhere, prompting countries to resume partial closings that could hurt fuel demand.
Brent crude fell 72 cents, or 1.8%, to $ 40.30 a barrel at 0231 GMT, while US crude was at $ 37.82, down 67 cents, or 1.7%.
Brent crude is expected to end in June with a third consecutive monthly rise after the world’s top producers extended an unprecedented 9.7 million barrels a day supply cut agreement until July, while oil demand improved afterwards. that countries around the world relax the blockade measures.
However, coronavirus cases globally topped 10 million on Sunday, when India and Brazil battled outbreaks of more than 10,000 cases daily. New outbreaks are reported in countries such as China, New Zealand and Australia, which has prompted governments to re-impose restrictions.
“The second wave of contagion is active,” said Howie Lee, an economist at OCBC Bank in Singapore. “That is limiting the bullish sentiment we’ve seen in the last six to eight weeks.”
Other factors restricting the advance in oil prices at this stage include poor refining margins, high oil inventories and the resumption of US production, Lee said.
Despite efforts by OPEC + – the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have reached all-time highs.
“There is also a risk that recent price hikes could cause some shale producers in the United States to restart the wells,” ANZ analysts said.
Although the number of operating oil and natural gas platforms fell to a record low last week, rising oil prices are prompting some producers to resume drilling.
“In the next two weeks, we should see an increase in the number of rigs in line with the increase in oil production,” said OCBC’s Lee.
Elsewhere, US shale oil pioneer Chesapeake Energy Corp. filed for bankruptcy on Sunday as it bowed to heavy debt and the impact of the coronavirus outbreak on energy markets.
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