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NEW YORK: Oil prices fell on Monday as investors worried about a second wave of coronavirus infections, but new Saudi production cuts eased concerns about oversupply and limited price losses.
Brent crude oil futures lost US $ 1.34, or 4.3%, to settle at $ 29.63 per barrel. US West Texas Intermediate (WTI) crude fell 60 cents, or 2.4%, to settle at $ 24.14 per barrel.
Global demand for oil has plummeted by about 30% as the coronavirus pandemic has slowed movement worldwide, leading to rising inventories globally. While crude oil futures have fallen more than 55% this year due to the virus, prices have increased in the past two weeks, supported by a modest pickup in demand as some travel restrictions are eased.
However, fears about a second wave of the virus weighed on futures.
Germany reported on Monday that new coronavirus infections were accelerating exponentially after the first steps to ease their blockage. Elsewhere, Wuhan, the epicenter of the outbreak in China, reported its first set of infections since the city shutdown was lifted a month ago.
South Korea also warned of a second wave of the virus on Sunday.
Prices were boosted at the start of the session after a Saudi energy ministry official said the ministry had ordered national oil company Saudi Aramco to cut its June crude production by an additional 1 million barrels per day.
“The main positive result of these additional cuts is that, according to our calculations, we will probably avoid global storage tank tops if demand increases as expected and no new blockade measures are imposed,” said the senior oil markets analyst at Rystad Energy. Paola Rodriguez Masiu.
The reduction is in addition to a pact by the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, a group known as OPEC +, to reduce production on May 1 by approximately 10 million bpd in an effort to maintain prices. .
“It is a balance between OPEC production cuts and concerns about the possibility of a second wave of coronavirus,” said Phil Flynn, senior analyst at Price Futures Group.
The Kazakh government signed a decree to cut oil production from May in line with an agreement agreed last month by the OPEC + producer group, four sources familiar with the matter told Reuters.
In the United States, fear that the country is running out of oil storage space sent WTI prices into negative territory last month, prompting some US producers to curb production.
The number of oil and gas rigs in operation at the world’s largest oil producer last week fell to 374, a record low according to 1940 data from energy services company Baker Hughes Co. – Reuters
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