Crude oil prices dropped lower on Tuesday amidst worries that new restrictions on businesses in the United States could threaten fuel demand recovery.
Also, expectations that OPEC+ might remove the cap placed on crude oil output from August, in a meeting scheduled for Wednesday, has sent Brent crude south.
Brent crude lost about 1.62% to trade at $42.04 per barrel by 6.25 am local time, after losing about 1% yesterday.
READ ALSO: Crude oil prices fall lower, oil traders focus on OPEC meeting
Sell-offs in the energy derivative increased pace in the energy market after news filtered in about California’s Governor commanding a massive retrenchment of the state’s reopening, banning indoor restaurants, shutting bars, gyms, hair salons, and closing churches in hardest-hit regions.
Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oils. The international benchmark is used to set the price of crude oil for about two-thirds of the world’s traded crude oil, including Nigeria’s crude (Bonny Light, Brass River, Qua Iboe, etc.).
READ ALSO: The effect of the United States’ Shale Oil on Nigeria?
Meanwhile, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the OPEC scheduled meeting that oil traders are focused on. He said:
“Still, speculation on OPEC+ strategy ahead of OPEC’s Joint Ministerial Monitoring Committee meeting tomorrow could make for an exciting 24 hours.
“Existing plans call for OPEC+ cuts to taper in August after a one-month extension.
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“While Russia has already indicated it expects to increase production in line with the agreement, there is the possibility that uncertainty around demand as a result of rising coronavirus infections will lead to another extension of the deepest initial phase of cuts.
“Traders do not expect the outcome to be hugely significant for oil either way. The most critical deliverable for OPEC+ is the continued demonstration of unity within the group.”
