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Oil price fell as new coronavirus outbreaks raised concerns on fuel demand
15 Jun 2020

Oil price fell

Oil price fell more than 2% on Monday as new coronavirus cases emerged in China and the US, extending last week’s decline and raising the possibility that a renewed outbreak of the virus could put pressure on a recovery in fuel demand.

Brent crude futures fell 89 cents, or 2.3%, to $37.84 a barrel by 0302 GMT, while U.S. West Texas Intermediate crude futures were down $1.18, or 3.3%, to $35.08 a barrel.

A cluster of infections in Beijing has raised fears of a resurgence of the disease.

The oil benchmarks fell about 8% last week, their first weekly decline since April, as U.S. cases of coronavirus began to rise. Over the weekend, the United States reported more than 25,000 new cases on Saturday alone, with more states reporting new infections and hospitalizations.

“The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought,” ING Economics said in a note.

Industrial output in the world’s largest crude oil importer, China, has risen for a second consecutive month in May, but at a smaller rate than expected, suggesting the world’s second-largest economy is struggling to get back on track after containing the coronavirus outbreak.

The country’s refineries increased their throughput in May by 8.2% more than the same period a year ago to about 13.6 million barrels per day (bpd), government data showed.

An OPEC-led monitoring panel will meet on Thursday to discuss ongoing record production cuts and see whether countries have delivered their share of the reductions, but will not make any decision, according to five OPEC+ sources.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have been reducing supplies by 9.7 million bpd, about 10% of pre-pandemic demand, and agreed in early June to extend the cuts for a month until end-July.

Iraqi officials working at the field told Reuters on Sunday that the country agreed in June to further cut crude production with its main oil company.

The oil minister later said output would average 2.8 million barrels a day in June.

 

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