Crude oil prices continued their bearish trend on Tuesday’s trading session in Asia. This is coming on growing concerns among oil traders that the surge in COVID-19 caseloads will falter demand for gasoline.
The number of global COVID-19 caseloads has continued to surge, with about 27 million cases as at September 7, according to data retrieved from Johns Hopkins University.
U.S. West Texas Intermediate (WTI) crude lost about 1.91%, to $39.01 per barrel, at the time this report was drafted. Brent crude was down by 0.17%, to $41.94 a barrel, after falling 1.5% on Monday.
In addition, the Saudis had just recently made their biggest price cuts on their crude grades in three months, as demand recovery for fuel hopes faded over the resurgence of the COVID-19 pandemic.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, gave insights on the bearish trend prevailing at the crude oil market. He said:
“Crude prices have tumbled around 10% in the past week, in part mirroring weakness in equity markets, which in turn reflects some concerns over the demand recovery, and aggravated by the conclusion of the US driving season.
“Not to mention traders are waiting for the results of the post-Labour Day coronavirus testing.
“Concerns remain elevated that the weekend festivities could result in a boost to flu cases, which comes at a gnarly time with seasonal worries elevated as the northern hemisphere heads for colder autumn months, forcing social activity indoors where the risk of catching the virus rises.”
However, while short-term downside risks always remain, the longer-term trend still points higher for oil prices, which should offer a modicum of support at current levels.