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New losses in oil prices after fears of new Coronavirus wave

Oil prices

Oil prices recorded new losses during Monday’s trading, after the worst week since last October.

The resurgence of the coronavirus pandemic has risen investor concerns about the short-term demand outlook.

Futures contracts in New York fell near $65 a barrel, after falling by 8% last week.

Oil prices

The renewed outbreak of the pandemic led Goldman Sachs Group Inc. to lower its forecast for economic growth in China, which recently completed a mass testing program in Wuhan – the original epicenter of the pandemic – after new confirmed cases.

Infections have also risen in the United States and Thailand.

A stronger dollar weakens the attractiveness of raw materials, such as oil and gold.

The currency maintained gains after jumping on Friday after a strong US jobs report fueled bets that the Federal Reserve may begin to ease its stimulus programme.

COVID restrictions renewed

Oil faced severe headwinds this month, as the rapidly spreading Delta strain of the virus swept across the globe, leading to renewed restrictions on movement in some areas.

This coincides with the increase in production from OPEC+.

The International Energy Agency is expected to provide an updated summary of the market on Thursday.

OPEC+ group will increase monthly supplies by 400,000 barrels per day, starting in August, and continue until its entire production is revived during the epidemic period.

While the recent outbreak of COVID-19 is making the outlook murky, it is estimated that the market will be able to absorb the additional barrels of production as demand accelerates.

The price of West Texas Intermediate crude for September delivery contracts fell by 3.7% to reach $65.77 a barrel on the New York Mercantile Exchange, after recording a decline of 7.7% last week.

Brent crude for October delivery contracts lost 3.5% to $68.26 on the European Stock Exchange in the Intercontinental Exchange trading of futures contracts, after declining by 0.8% on Friday.

 

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