Oil prices dragged lower at Monday’s trading session in Asia. Traders are deeply worried over rising COVID-19 cases upsetting hopes for a smooth recovery in energy demand, with both main oil benchmarks on track for their first monthly declines in multiple months after last week’s plunge.
What we know: Brent crude (LCOc1) dropped by 0.69%, to trade at $41.63 a barrel by 05.54 GMT after losing 2.9% last week.
West Texas Intermediate (CLc1) was down, trading at $39.44 a barrel, losing about 0.77%, following a 2.1% decline last week.
Oil traders are concerned about the blurred demand outlook in the short term, as an unexpected build in oil production coupled with additional oil supplies by Libya, rattled the nerves of oil traders.
Still, OPEC Secretary-General, Mohammad Barkindo, disclosed yesterday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of 2020.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke on political macro weighing down on oil prices at the moment. He said:
“Reports that ministers in the UK are preparing to enforce ‘total’ social lockdown across many Northern Britain and London could cap prices this morning. Sure, this could be an ‘overreaction’ in an attempt to clamp down on further anti-lockdown protests after the massive anti demonstration at Trafalgar square on the weekend, which could eventually prove to be a Covid-19 hot spot.”
The surge in the Covid-19 onslaught, marked by record numbers of cases in Western Europe and the United States, prompted the strengthening of various countries’ COVID-19 restrictions which continue to weigh heavily on demand for gasoline.