Oil prices were down on Monday as vaccine hopes were overshadowed by a worldwide surge in new COVID-19 cases amid fresh lockdowns in the US, Europe and Asia, which raised concerns over the outlook for crude demand.
International benchmark Brent crude was trading at $49.09 per barrel at 0641 GMT for a 0.32% decline after closing Friday at $49.25 a barrel.
American benchmark West Texas Intermediate was at $46.06 per barrel at the same time for a 0.43% decrease after it ended the previous session at $46.26 a barrel.
Concerns that stiffening coronavirus mitigation measures will reflect negatively on global economies due to increasing cases worldwide is exerting pressure on oil prices.
California in the US, Germany, Iran and South Korea are among the countries that imposed new lockdowns and restrictions.
According to data from Johns Hopkins University on Monday, the number of cases worldwide has now reached over 67 million. The US, the world’s largest oil-consuming country, still tops the number of cases above 14.7 million, while cases in India now total over 9.6 million, and Brazil follows with over 6.6 million cases.
Although oil prices extended gains toward $50 a barrel after OPEC+ reached a deal to incrementally ease production cuts, the decision failed to meet market expectations of extending the current deal for three months, weighing on prices.
Moreover, as an indicator of short-term production in the country, the number of US oil rigs increased by 5 to 246 last week compared to the previous week. This signals greater output while raising worries over a supply glut.
However, with mounting optimism over COVID-19 vaccines and the return of consumption in Asia, hope is boosted for the clearing of the current supply glut to cap further price declines.
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