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Oil mixed on supply cuts, fears of second coronavirus wave

REUTERS/Angus Mordant/File Photo

Oil prices were mixed on Monday, supported by Saudi Arabia’s move to reduce output by 1 million barrels per day (bpd) on top of reductions agreed under an OPEC+ pact, but pressured by fears of a second wave of coronavirus infections.

Brent crude LCOc1 was down 32 cents, or 1%, at $30.65 a barrel by 1356 GMT, while U.S. West Texas Intermediate crude CLc1 rose 16 cents, or 0.6%, to $24.90. Global oil demand has slumped by about 30% as the coronavirus pandemic has curtailed movement across the world, leading to growing inventories globally. To reduce the oversupply the Organization of the Petroleum Exporting Countries (OPEC) and allied producers - a grouping known as OPEC+ - agreed to cut production from May 1 by about 10 million bpd in an effort to support prices. On Monday a Saudi energy ministry official said that the ministry has directed national oil company Saudi Aramco to reduce its crude oil production for June by an extra 1 million bpd.

“The recent turmoil in the oil market was triggered by supply and demand developments. The very same factors have seemingly reversed and are now supporting oil prices,” said oil broker PVM’s Tamas Varga. Oil prices came under pressure on signs of a second wave of coronavirus infections after Wuhan, the epicentre of the outbreak in China, reported its first cluster of infections since the city’s lockdown was lifted a month ago. New coronavirus infections are accelerating in Germany only days after it loosened social restrictions, raising concerns that the pandemic could again slip out of control. South Korea also warned of a second wave of the virus on Sunday.

11 May 2020

News Source Reuters

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