On Monday, oil prices inched up, buoyed by the tighter supplies from the world’s major oil producers. However, concerns over demand caused by the soaring new cases of coronavirus globally capped the rise.
By 00.09 GMT, Brent crude oil futures edged up by 0.2% or 9 cents to USD42.28/barrel while US WTI climbed by 1 cent to USD39.76/barrel.
Last week, both benchmarks jumped by around 9%, with Brent futures flipped into backwardation indicating a tightening in supply.
The tightening supply is indicated by several factors. The operating oil and gas rig count in the US and Canada slumped to a record low, even when several producers have started drilling due to the higher oil prices.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+)’s pledge to strictly commit with the 9.7 million bpd output cuts with laggard countries Iraq and Kazakhstan to compensate for their incompliance also supported the prices.
The group has not decided yet whether it would extend the supply curb pact for a fourth month in August.
However, on Sunday the World Health Organization (WHO) reported a record jump in global new cases of coronavirus. The biggest increase was seen in the north and south America.
Several regions have reapplied movement restrictions to limit the spread, such as China’s Beijing and Australia’s Victoria.
Economist Michael McCarthy of CMC Market opined that the potential economic damage of a new round of coronavirus countermeasures will likely contain any investor enthusiasm.
