Oil falls on concerns about falling fuel demand as infections rise

TOKYO (Reuters) – Oil prices fell on Monday amid concerns that a recovery in fuel demand could be affected by an increase in the rate of coronavirus infections worldwide.

Brent LCOc1 crude fell 36 cents, or 0.8%, to $ 42.78 a barrel at 0653 GMT, after falling slightly last week. US oil lost 34 cents, or 0.8%, at $ 40.25 a barrel, after gaining 4 cents last week.

More than 14.5 million people have been infected with the new coronavirus globally, and more than 604,000 have died of COVID-19, the disease caused by the pathogen, according to a Reuters count.

“The never-ending coronavirus pandemic may compel countries to reinstate blockade measures that will slow economic growth and slow energy demand,” said Avtar Sandu, product manager at Phillip Futures.

While fuel demand has rebounded from a 30% drop in April after countries around the world imposed strict blockades, usage is still below pre-pandemic levels. Retail demand for gasoline in the United States drops again as infections increase.

Japan’s oil imports fell 14.7 percent in June from the same month a year earlier, official figures showed on Monday. The decline was not as steep as in May, when they fell 25% year-over-year. [O/JAPAN1]

Still, exports from the world’s third largest economy plummeted for a double-digit decline for the fourth consecutive month, as the coronavirus pandemic had a high cost on global demand.

In the United States, power drillers cut the number of oil and natural gas platforms to a record for the eleventh consecutive week, data showed on Friday. [RIG/U]

The market largely dismissed news that the 84-year-old Saudi Arabian ruler, King Salman bin Abdulaziz, has been admitted to the hospital, suffering from inflammation of the gallbladder.

The king has ruled the world’s largest crude oil exporter and a close ally of the United States since 2015. Saudi Arabia has led efforts to cut production since the coronavirus outbreak evaporated demand for fuel.