The black liquid is down in the New York trading session today, on the back of surging cases of coronavirus in Japan and weak demand picture in the Asian continent.
Brent crude, the global benchmark for crude oil, is down by 0.85%, currently trading at $68.92 per barrel while the U.S benchmark, the West Texas Intermediate crude (WTI) is down 1.27%, currently trading at $66.20 a barrel, as of the time of this writing. Both contracts had fallen for three straight sessions.
Japan, the world’s third-largest economy, today extended its state of emergency in Tokyo and other regions and announced new measures covering seven more areas to counter the recent surge in COVID-19 infections that is threatening the medical system and the economy as a whole. Another country that returned to lockdown is New Zealand. The country entered a new lockdown after the country’s first coronavirus case in six months was reported.
Data from China, the world’s biggest oil importer, revealed that the daily crude processing in the country, fell to its lowest in July since May 2020 as independent plants cut production amid tighter quotas, high inventories and weakening profits. China’s factory output and retail sales growth also decelerated sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted businesses.
Hedge funds and money managers are also cutting their net long positions in U.S. crude to the lowest since November as resurgent coronavirus infections in several countries dampened hopes of a rapid resumption in long-distance air travel.
What they are saying
Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois stated that “Although some progress in slowing or reversing COVID-19 trends is being seen, the oil market will likely require a distinct downtrend in the virus that will allow China to re-open its economy in allowing the energy complex to establish a near-term base of support capable of reversing the long liquidation out of the WTI space.”
Last week, U.S. President Joe Biden’s administration urged the Organization of the Petroleum Exporting Countries and its allies (OPEC+), to boost oil output to tackle rising gasoline prices.
According to data, the U.S. shale oil output is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since April 2020.
Even with the Biden’s administrations appeal, the OPEC+ seems to be firm on its decisions as four sources told Reuters on Monday that the group believes oil markets do not need more crude than they plan to release in the coming months.