New York: Oil futures fell on Tuesday, Brent fell below $ 40 a barrel for the first time since June and US crude fell more than 8%, after Saudi Arabia cut its October sales prices amid a outbreak of coronavirus cases around the world.
Coronavirus infections are on the rise in India, Britain, Spain and various parts of the United States, where the infection rate has not been controlled for months. The spike in disease could weaken the global economic recovery and deplete demand for fuel.
US West Texas Intermediate (WTI) crude fell $ 3.42, or 8.6%, to $ 36.35 at 11:33 AM EDT (1533 GMT), its lowest since June 15. Brent crude fell $ 2.46, or 5.9%, to $ 39.55 a barrel.
Both benchmark oil indices have fallen below their trading ranges throughout August. Brent falls for the fifth day and has lost more than 10% since the end of August.
“The losing streak is driven by a stagnant oil demand outlook for the rest of the year,” said Paola Rodríguez-Masiu, an analyst at Rystad Energy.
Crude fell on Monday after Saudi Arabia’s state oil company Aramco cut official October sales prices for its Arab light oil, a sign that demand could be weakening.
“The Saudi Arabian price cuts announced Sunday made WTI unattractive to Asian buyers,” said energy analyst Phil Verleger of Colorado-based PK Verleger LLC.
Still, oil has rebounded from record lows reached in April, thanks to a record supply cut by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +. Producers will meet on September 17 to review the market.
Crude has also found support in a weaker US dollar, although the US currency rose on Tuesday. The market could rebound beyond $ 45 later this year, said Norbert Ruecker, chief economist at Swiss bank Julius Baer.
“Fundamentally, things have not changed,” he said. “Demand is recovering, supply remains tight and excess storage is slowly disappearing.”
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