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Hazloc Heaters
Copper Tip Energy Services
Hazloc Heaters
Copper Tip Energy

Oil Drops as the World’s Emergence From Virus Lockdown Slows

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These translations are done via Google Translate

By Low De Wei and Alex Longley

(Bloomberg) Oil slipped for a second day on signs of a slower emergence from lockdown in some corners of the globe.

Futures fell by as much as 2.6% in New York. California, one of the largest gasoline-consuming states in America, announced on Monday that it would pull back on reopening efforts, the latest red flag for the return of oil demand. This isn’t just happening in America — Hong Kong imposed its strictest social distancing measures yet and Japan said a new state of emergency is possible if infections increase.

Crude’s drop was part of a broader downward move in markets, as the economic hit of rising virus cases continues to grow. European equity markets extended a global retreat.

Change in market structure shows glut concern resurfacing

An OPEC+ committee meets Wednesday to discuss easing record output curbs that have helped the market recover. The group is expected to stick to its plan of tapering the cuts from August even as the coronavirus rages unabated in many parts of the world. An increase in supply from OPEC+ would hit a global economy that’s still far from pre-virus levels of activity, with a range of indicators in the U.S. suggesting the recovery has slowed in the past few weeks.


“Everybody agrees it’s very early days, it’s not going to be a straight line recovery with the resurgence in cases in the U.S. in particular,” Amrita Sen, chief oil analyst at Energy Aspects said in a Bloomberg TV interview.

  • West Texas Intermediate for August delivery fell 0.9% to $39.76 a barrel as of 10:34 a.m in London
  • Brent for September settlement dropped 0.7% to $42.43 a barrel
  • Brent’s prompt contango settled at its weakest level in a month on Monday, a sign of softer market fundamentals

The OPEC+ committee will consider whether the alliance should keep 9.6 million barrels of daily output off the market for another month, or taper the cutback to 7.7 million barrels as originally planned. Members are leaning toward the latter, according to several national delegates who asked not to be identified.

Meanwhile, compliance with the existing agreement seems to be improving. Saudi Arabia commended Iraq for implementing almost all of its oil production cuts last month, according to the state-run Saudi Press Agency.

Other oil-market news
  • Saudi Arabia will fulfill the crude oil supply requests of several buyers in Asia and some in Europe just days before OPEC+ officials are scheduled to discuss whether to ease their historic output cuts.
  • Middle East producers are banking on robust demand from Asia for its more sulfurous and dense crude, boosting prices for the dirtier oil even as OPEC+ considers loosening cuts.
  • The coronavirus pandemic will accelerate Eni SpA’s pivot away from conventional refineries to investing in greener facilities.
  • China’s crude oil imports rose to a record of almost 13 million barrels a day in June, as a long line of vessels carrying cheap oil bought months ago wait to offload their shipments.

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