Oil Prices Dip on Renewed Lockdown Fears
Global crude oil prices dipped for the second straight session on Monday, as a steep rise in new coronavirus cases in the United States and several other countries around the world raised concerns that new government-imposed lockdowns could severely hurt a recovery in international fuel demand.
On Monday morning, the price of the Brent crude contract for near-month delivery dropped 81 cents, or 2%, to US$40.21 a barrel, while the U.S. benchmark West Texas Intermediate (WTI) crude contract was down around 75 cents at US$37.69 a barrel.
Global Covid-19 infections surpassed the 10-million mark on June 28th, as India and Brazil battle daily increases of more than 20,000 cases each. Moreover, reports of new outbreaks in countries that had previously claimed that new infections were under control, such as China, New Zealand, and Australia, have raised concerns that authorities might be forced to implement lockdown restrictions again.
According to traders, oil prices are also under pressure from rising inventories and the likely resumption of recently shut-in U.S. production, even as the number of operating oil & gas rigs in the U.S. dropped to a record low last week.
Despite the recent decline, global crude prices are set to end June with a third consecutive monthly gain, after the OPEC+ group of producers including Russia extended an unprecedented supply cut agreement.
According to industry analysts, the next two weeks will be critical for OPEC+ to demonstrate that all the producer countries concerned are adhering to the production cuts.