Oil futures on Monday traded sharply lower as concerns about new cases of coronavirus in parts of the world dimmed optimism about the economic outlook and therefore appetite for crude.
On top of that, oil giant BP PLC warned that the COVID-19 pandemic will have a lasting economic impact, hurting demand for oil and weighing on energy prices. The energy giant also wrote down as much as $17.5 billion of its assets, noting that the public health crisis may force it to leave fallow some of its energy production assets.
“Naturally reports of spikes in new cases in the US, China and Japan aren’t helpful for crude price,” wrote Craig Erlam, senior market analyst at Oanda, in a Monday report.
“Oil prices will remain very sensitive to evolving COVID situation, despite the best efforts of producers around the world to rebalance the market,” he wrote.
West Texas Intermediate crude for July delivery, the U.S. benchmark, were trading down $1.42 or nearly 4%, at $34.84 a barrel, at last check, after WTI marked a weekly slide of 8.3% on Friday.
Global benchmark Brent oil for August delivery declined $1.07, or 2.8%, at $37.64 a barrel on ICE Futures Europe, following a 8.4% decline last week.
Both Brent and WTI last week posted their first weekly loss in 7 weeks.
China shut down produce market in Beijing after a number of new coronavirus infections, while U.S. states, including Florida, California, and Arizona, among others, were seeing infections increase, raising fresh doubts about reopeninngs and the path for recovery from countries that are facing a recession due to efforts to limit the spread of the deadly pathogen.