Oil prices drop as rising US coronavirus cases stoke fears of weak fuel demand

[SEOUL] Oil prices fell on Monday, with US oil dropping more than 2 per cent, as a spike in new coronavirus cases in the United States raised concerns over a second wave of the virus which would weigh on the pace of fuel demand recovery.

Brent crude futures fell 66 cents, or 1.7 per cent, at US$38.07 a barrel as of 0016 GMT, while US West Texas Intermediate (WTI) crude futures fell 81 cents, or 2.2 per cent, to US$35.45 a barrel.

Both benchmarks ended down about 8 per cent last week, their first weekly declines since April, hit by the US coronavirus concerns: More than 25,000 new cases were reported on Saturday alone as more states, including Florida and Texas, reported record new infection highs.

"Concerns about the recent uptick in Covid-19 infections in the US and a potential 'second wave' are weighing on oil at the moment," said Stephen Innes, chief global market strategist at AxiCorp.

Meanwhile, an Opec-led monitoring panel will meet on Thursday to discuss ongoing record production cuts to see whether countries have delivered their share of the reductions, but will not make any decision, according to five Opec+ sources.

The Organization of the Petroleum Exporting Countries (Opec) and its allies, collectively known as Opec+, have been reducing supplies by 9.7 million barrels per day (bpd), about 10 per cent of pre-pandemic demand, and agreed in early June to extend the cuts for a month until end-July.

Iraq, one of the laggards in complying with the curbs, agreed with its major oil companies to cut crude production further in June, Iraqi officials working at the fields told Reuters on Sunday.

REUTERS