New wave of Covid-19 cases pushes oil prices lower

London — Oil prices fell on Monday as new coronavirus infections hit China, Japan and the US, adding to concerns that a resurgence of the virus could weigh on the recovery of fuel demand.

Brent crude was down 93 US cents, or 2.4%, at $37.80 a barrel by 8.08am GMT. US West Texas Intermediate crude was down $1.33, or 3.7%, at $34.93 a barrel.

“The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought,” ING’s head of commodities strategy Warren Patterson said.

After nearly two months with no new infections, Beijing officials have reported 79 cases of the coronavirus over the past four days.

US coronavirus cases also started increasing. More than 25,000 new US cases were reported on Saturday alone as more states reported new infections and hospitalisations.

Economic data from China was also not promising. China’s industrial output expanded 4.4% in May from a year earlier but the gain was less than expected, suggesting the world’s second-biggest economy is still struggling to get back on track.

Still, Chinese refineries’ throughput in May rose 8.2% from the same period a year earlier to about 13.6-million barrels per day (bpd).

“Overall, with oil supply flowing in a more or less expected path, demand will now be the key price mover,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

An Opec-led monitoring panel will meet on Thursday to discuss ongoing record production cuts and see whether countries have delivered their share of the reductions.

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 country’s giant southern oilfields said on Sunday.

Reuters