On Monday, oil prices extended the fall from the previous session as the spike of coronavirus cases in some countries has prompted countries to resume the partial lockdowns, potentially dent demand for fuel.
By 02.31 GMT, Brent crude oil futures fell by 1.8% or 72 cents to USD40.3/barrel while the US WTI crude futures lost 1.7% or 67 cents.
Nevertheless, Brent crude is still set to close this month with a third monthly gain in a row after the Organization of the Petroleum Exporting Countries and its non-member oil producer allies (OPEC+) extended its 9.7 million bpd output cuts into July and countries started reopening activities which spurred fuel demand.
However, many governments including China, New Zealand, and Australia are again imposing restrictions due to new outbreaks of coronavirus. The global new infections rose to more than 10 million on Sunday, putting a halt to the bullish sentiment from the last two months.
Economist Howie Lee of OCBC Bank listed the other factors capping the gains of current oil prices, including lower refining margins, soaring oil stockpiles, and the resumption of US output.
Crude oil stockpiles in the US have hit a record high despite the reduction being worked out by OPEC+. Some analysts expected in the coming weeks some of US shale producers would restart wells in response to the recent gains n prices after posting the record low number of operating oil and natural gas rigs last week.
On a side note, on Sunday, US shale oil pioneer Chesapeake Energy Corp. had filed for bankruptcy protection. Heavy debts and the dent in the energy markets caused by the coronavirus outbreak have weakened the company.
