Oil falls on fears of second virus wave

New output cuts by Saudi Arabia limit price losses

NEW YORK: Oil prices fell on Monday as investors were worried about a second wave of coronavirus infections, but new output cuts from Saudi Arabia tempered worries about oversupply and limited price losses.

Brent crude futures fell $1.04, or 3.4%, to $29.93 a barrel by 1658 GMT. US West Texas Intermediate (WTI) crude fell $0.3, or 1.2%, to $24.44 a barrel.

Global oil demand has slumped by about 30% as the coronavirus pandemic has curtailed movement across the world, leading to growing inventories globally. While crude futures have fallen more than 55% this year because of the virus, prices have gained in the past two weeks, supported by a modest rebound in demand as some travel restrictions are eased.

However, fears about a second wave of virus infections weighed on futures.

Germany reported on Monday that new coronavirus infections were accelerating exponentially after early steps to ease its lockdown.

Elsewhere, Wuhan, the epicentre of the outbreak in China, reported its first cluster of infections since the city’s lockdown was lifted a month ago. South Korea also warned of a second wave of the virus on Sunday.

“Traders stepped back from last week’s enthusiasm, contemplating the possibility of a second wave of the epidemic,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

Published in The Express Tribune, May 12^th, 2020.

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