- Coronavirus Infections Impact
- Oil Glut Supply Concerns
- OPEC Panel Meeting
Oil prices were down, Monday morning, as the threat of a second wave of coronavirus infections in the U.S and China continued to rattle the oil markets. Prices were down by as much as 2% amidst fear that the second wave will take a toll on oil demand leading to a further glut in supply.
Oil Prices Tank
Oil Futures in New York dropped to about $35 a barrel after an 8.3% drop last week. West Texas Intermediate crude futures were down 3.3% to $35.08 as Brent Crude futures fell 2.3% to $37.84 a barrel.
A slide in oil prices came amidst growing concerns that re-emergence of coronavirus infections in Beijing will affect oil demand. China is the world’s largest crude oil importer. In May, crude imports to China rose but still fell short of expectations, raising concerns as to whether the country will ever recover fully from the pandemic to fuel a spike in oil demand.
The slow pace in oil demand recovery is the latest tailwind taking a toll on oil sentiments. Worries that a recovery in demand could take longer, than initially thought, continue to limit oil prices below the $40 a barrel level.
Production Cut Push
A monitoring panel of the Organization of the Petroleum Exporting Countries is poised to meet later in the week to discuss the record production cuts that helped catapult prices above the $40 a barrel early in the month. The panel is to report as to whether countries are adhering to the 9.7 million barrel a day production cut.
The cuts are highly needed at a time when demand is showing no signs of improving, even with the opening of economies around the world. Amidst the production cuts, Yemen is reportedly planning to raise its oil production by about 25% to 75,000 barrels a day in the coming months.