Crude oil plunged on Monday morning at London’s trading session, amid increasing concerns of the second wave of COVID-19 cases in many nations around the world.
Brent oil futures fell 3.16% to $38.02 by 4am local time in an attempt to pull back some of its losses of about 8% from the last trading session.
Concerns about the second wave of COVID-19 cases increased over the weekend, with China, the world’s most populous nation, reporting 57 new cases on Saturday after a new outbreak in Beijing.
Japan’s major city, Tokyo also reported 47 new cases, its highest number of caseloads of COVID-19 since May 5. It should also be noted that the world’s largest economy, America also saw an upward movement in the number of cases.
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Why this affects Brent crude prices: The sudden rise of COVID-19 cases in the world’s three largest economies (United States, China, and Japan) had oil traders worried that crude’s fragile demand would drop again, and trigger an oil glut.
“Concerns about the recent uptick in COVID-19 infections in the U.S. and a potential ‘second wave’ are weighing on oil at the moment,” Stephen Innes, AxiCorp’s chief global market strategist, told Reuters.
Meanwhile, OPEC+ will design a monitoring committee, to jump-start discussions on its pledged crude oil output cuts and evaluate such compliance on Thursday, but the committee won’t make any binding decision.