The United States and Europe has raised alarms over crude demand as oil prices fell on Monday following a jump in COVID-19 infections, extending last week’s losses, while the prospect of increased supply also dampen sentiment.
Brent crude was down by 53 cents, or 1.3 percent, at $41.24, the U.S. West Texas Intermediate (WTI) dropped 53 cents, or 1.3 percent, to $39.32, having fallen more than a dollar shortly after the start of trading.
Brent fell 2.7 per cent last week and WTI dropped 2.5 per cent.
The United States reported its highest number yet of new coronavirus infections in two days through Saturday, while in France new cases hit a record of more than 50,000 on Sunday, underlining the severity of the outbreak.
On the supply side, Libya’s National Oil Corp on Friday ended its force majeure on exports from two key ports and said production would reach 1 million barrels per day (bpd) in four weeks, a quicker ramp-up than many analysts had predicted.
The OPEC+, a grouping of producers including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, is also set to increase output by 2 million bpd in January 2021 after cutting production by a record amount earlier this year.
“A resurgence in COVID-19 cases in Europe and North America has stopped the recovery in demand in its tracks,” ANZ Research said in a note.
“If market conditions worsen, (OPEC+) will have no choice but to delay the increase of quotas by a month or two at its meeting on December 1,” ANZ said.
Russian President Vladimir Putin indicated last week he may agree to extend OPEC+ oil production reductions.
In the United States, energy companies increased their rig count by five to take the total to 287 in the week to Oct. 23, the most since May, energy services firm Baker Hughes Co said. The rig count is an indicator of future supply.
Still, investors increased their net long positions in U.S. crude futures and options during the week through Oct. 20, the U.S. Commodity Futures Trading Commission said on Friday.