Crude oil prices started the trading week at London’s session with a decline, due to growing concerns on oil glut. This macro is coming to light as OPEC+ eased some production cuts this month despite the resurgence of the COVID-19 pandemic.
Brent crude was down 0.34% to trade at $43.37 a barrel as of 6.15 GMT. Also, the West Texas Intermediate (WTI) crude futures lost 0.7%, to trade at $40.02 a barrel.
Brent crude posted its fourth month of gains in July. Also, the West Texas Intermediate printed a third monthly gain as both rose from their record lows in April, when much of the world was in lockdown due to the ravaging COVID-19 virus.
Some insights: Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the impact of COVID-19 fears on crude oil prices. He said:
“Indeed, it speaks fear fast and loud, just how quickly this virus is spreading around the world.
“Adding to matters is that the US consumer market is entering the last few weeks of peak driving season and with mobility tracking data flat-lining so unless there is a significant drop in the Covid-19 case count curve that is sufficient enough to reduce consumer fear of the virus and shift mobility data higher, demand might not get much better from here on in.“
What can change this bearish bias?
Crude oil traders are hoping for a super hot August in major economic hubs, especially in some parts of Europe and Asia, so that some of the recent builds in OPEC production can be used to power air conditioning facilities.