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Oil slashed last week’s gain as fears of a potential resurgence in global coronavirus cases countered tentative signs of a recovery in demand.
Futures fell 2.3% in New York to trade near $ 24 a barrel. China put Shulan, a city near the North Korean border, locked up over the weekend, while in the United States, the White House was hit with a case of the virus even when President Donald Trump encouraged Americans go back to work. In India, data showed that consumption of petroleum products fell 46% in April to a 12-year low.
“The weakness persists,” said Bjarne Schieldrop, chief commodity analyst at SEB. With a new virus crash in China, “it is not so strange that crude oil prices are returning some of its strong gains from last week.”
Prices
- West Texas Intermediate for June delivery fell 58 cents to $ 24.16 a barrel on the New York Mercantile Exchange at 10:58 a.m. London time
- Brent for July settlement fell 2.4% to $ 30.24 a barrel, after rising 17% last week
There are signs that gasoline demand is picking up as parts of the world reopen. And in China, an economy that is gradually emerging from the blockade, oil reserves have shrunk in recent weeks after growing to a record.
Investors have returned to the crude market, and money managers last week held the largest long net position in WTI in just over a year, according to CFTC data released on Friday.
But despite optimism, there is persistent concern that a relaxation of closure restrictions could bring a second wave of infections, once again reducing oil demand.
The collapse of consumption caused by the pandemic has forced countries around the world to reduce oil production. In the United States, producers reduced the number of active drilling rigs from 33 to 292 last week, the lowest level since September 2009, according to data from Baker Hughes.
