Oil prices drop as rise in coronavirus cases stokes fuel demand fears

Oil prices slid on Tuesday on lingering concerns over the threat to fuel demand from the resurgence of new coronavirus infections around the world, though hopes for further cuts in crude supplies stemmed losses, Reuters reports.

Brent crude LCOc1 fell 20 cents, or 0.5%, at $39.52 a barrel by 0424 GMT, having gained 2.6% on Monday. U.S. oil CLc1 dropped 21 cents, or nearly 0.6%, to $36.91 a barrel, after closing 2.4% higher in the previous session.

Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks. But some observers said they didn’t expect to see any return to the stringent lockdowns seen at the start of the year.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping known as OPEC+, agreed this month to extend production cuts of 9.7 million barrels per day through July. They also called on members that have not been complying to make up their commitments with extra cuts later.

Elsewhere U.S. shale producers are also cutting back on drilling amid the collapse in demand for oil.

Production from seven major U.S. shale formations is likely to drop to close to a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.

U.S. drillers have slashed production and the number of oil rigs fell below 200 last week, the lowest since June 2009, according to energy services company Baker Hughes Co. 

News.Az 

You Might Also Like