London: Oil slipped more than 3% to $ 40 a barrel on Tuesday, its fifth session of decline, under pressure from fears that a recovery in demand would weaken as coronavirus infections erupt around the world.
Coronavirus cases increased in 22 of the 50 U.S. states, according to a Reuters analysis over the Labor Day weekend. New infections are also increasing in India and Britain.
Brent fell $ 1.43, or 3.4%, to $ 40.58 a barrel at 11:27 a.m. GMT, and previously slipped to $ 40.55, the lowest since June 29. West Texas Intermediate (WTI) fell $ 2.06, or more than 5%, to $ 37.71.
On Monday, crude fell after Saudi state oil company Aramco cut official October selling prices for its Arab light oil, a sign that demand may stutter.
“The weakness in prices continues today,” said Eugen Weinberg, analyst at Commerzbank. “We believe this is primarily due to demand issues.”
Both benchmarks for oil fell outside the ranges they traded in August. Brent has fallen more than 10% since late August.
“The string of losses is due to a weaker outlook for crude demand for the remainder of the year,” said Paola Rodriguez-Masiu, analyst at Rystad Energy.
Yet oil has recovered from historic lows reached in April, thanks to a record reduction in supply by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +. Producers meet on September 17 to review the market.
Crude also found support from a weaker US dollar, although the US currency was higher on Tuesday. The market could rise above $ 45 later this year, said Norbert Ruecker, head of economics at Swiss bank Julius Baer.
“Basically, things haven’t changed,” he said. “Demand is picking up, supply remains limited and the storage overhang is slowly disappearing.”
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