Oil Slides Towards $40 on Demand Fears Sparked by Rising COVID-19 Cases

Tuesday, September 8, 2020

Oil slid more than 3% towards $40 a barrel on Tuesday, its 5th session of decline, pressured by concerns that a recovery in demand could weaken as coronavirus infections flare up around the world.

Coronavirus cases rose in 22 of the 50 U.S. states, a Reuters analysis showed on the Labor Day holiday weekend. New infections are also increasing in India and Britain.

Brent crude fell $1.43, or 3.4%, to $40.58 a barrel at 1127 GMT, and earlier slipped to $40.55, the lowest since June 29. U.S. West Texas Intermediate (WTI) crude dropped $2.06, or over 5%, to $37.71.

On Monday, crude fell after Saudi Arabia's state oil company Aramco cut the October official selling prices for its Arab light oil, a sign demand may be stuttering.

"The price weakness is continuing today," said Eugen Weinberg, analyst at Commerzbank. "We believe this is attributable first and foremost to demand concerns."

Both oil benchmarks have dropped out of the ranges they were trading in throughout August. Brent has fallen more than 10% since the end of August.

"The streak of losses is driven by a stalling crude demand outlook for the rest of the year," said Paola Rodriguez-Masiu, analyst at Rystad Energy.

Still, oil has recovered from historic lows hit in April, thanks to a record supply cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+. The producers are meeting on Sept. 17 to review the market.

Crude has also found support from a weaker U.S. dollar, although the U.S. currency was up on Tuesday. The market could rally beyond $45 later this year, said Norbert Ruecker, head of economics at Swiss bank Julius Baer.

"Fundamentally, things have not changed," he said. "Demand is recovering, supply remains constrained, and the storage overhang is slowly disappearing."

 (Additional reporting by Sonali Paul and Seng Li Peng; Editing by Louise Heavens and David Evans)

Categories: Production Oil Price

Related Stories

PTTEP Acquires Southeast Asia’s Offshore Block from Chevron’s Hess Unit for $450M

China Rolls Out 17MW Floating Wind Turbine Prototype

EnQuest Picks Up Offshore Oil and Gas Block in Brunei

Seatrium Makes First Turnkey FPSO Delivery to Petrobras

Baker Hughes, Petronas Team Up for Asia-Pacific Energy Resilience

Woodside Finds South Korean Partners to Advance LNG Value Chain

PTTEP Hires Energy Drilling’s Rig for Southeast Asia Offshore Job

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

CNOOC Puts Into Production New Oil Field in South China Sea

Current News

PTTEP Acquires Southeast Asia’s Offshore Block from Chevron’s Hess Unit for $450M

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

Pandion Energy Divests Interests in Three Norwegian Assets to Inpex

China Starts Production at Major Oil Field in Bohai Sea

Dutch Contractor Completes Malaysia’s Largest 'Rig-to-Reef' Decom Project

China Rolls Out 17MW Floating Wind Turbine Prototype

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

EnQuest Picks Up Offshore Oil and Gas Block in Brunei

CNOOC Finds Oil and Gas in South China Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com