Oil prices declined as coronavirus cases spike

Oil prices declined on Monday as surge in coronavirus cases due to the delta variant prompted fear of lockdown.

West Texas Intermediate crude futures declined 2.5% at $66.60 per barrel while Brent crude declined 2.2% at $69.15 per barrel.

“The biggest challenge for oil markets remains the uncertainty around COVID as the ‘delta variant’ has made for the highest daily case counts since early 2021,” Bank of America said, reported CNBC.

Due to the worries of lockdown, both contracts declined more than 7% last week, the highest plunge since October.  Also, a surprise buildup in U.S. inventory was reported as the U.S. Energy Information Administration said Wednesday that crude stocks rose by 3.6 million barrels in the prior week.

World’s second largest oil consumer, China’s data also impacted prices as the country imported only 9.7 million barrels per day in July the fourth straight month below 10 million bpd.

“The price slide is continuing [Monday] amid growing concerns about demand again,” the firm wrote in a note to clients, reported CNBC. “Market participants are watching the rising coronavirus figures in Asia with considerable alarm, as this could prompt the Chinese government to take drastic measures in line with its strict zero Covid strategy.”

OPEC and its allies recently decided to increase production after the group, in 2020, implemented production cuts of nearly 10 million bpd as demand died due to the lockdown.

(With inputs from CNBC)

Picture Credits: CNBC