Oil costs plunged Monday as concern over a persistent excess and financial gloom brought on by the coronavirus pandemic combined to cancel out support from supply reductions among the world’s top producers.
Brent crude futures were down 0.9% (23 cents) at $30.68/barrel, whereas U.S. West Texas Intermediate crude futures slumped 0.7% (17 cents) to $24.57/barrel.
Each benchmark has notched up gains over the past two weeks as nations have eased business and social lockdowns imposed to cope with the coronavirus and fuel demand has bounced modestly. Oil production worldwide is also falling.
However, possible indicators of the second wave of coronavirus infections in northeast China and South Korea worried investors even as extra nations started to pivot towards easing pandemic constraints in moves that might support oil demand.
Goldman Sachs analysts stated there was still concern that demand will remain weak next year, with worries a few second waves of COVID-19 cases and only a modest increase in personal or corporate travel.
Oil demand worldwide has dropped by nearly 30% as the coronavirus pandemic halted movement across the world; also, building up inventories.
Fears that the U.S. is falling short of storage space triggered WTI costs crashing into negative territory last month, prompting some U.S. producers to cut output.
In a sign of that impact, the number of operating oil and gas rigs in the world’s largest oil producer dropped to 74 in the week to May 8, a record low in accordance with data launched on Friday from energy services firm Baker Hughes going back to 1940.