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Oil edges lower as rising COVID-19 cases cloud demand recovery outlook

Oil edges lower as rising COVID-19 cases cloud demand recovery outlook

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma, Sep 15, 2015. (File photo: REUTERS/Nick Oxford)

SINGAPORE: Oil prices dipped again on Monday (Sep 28) as rising coronavirus cases upset hopes for a smooth recovery in fuel demand, with crude on track for its first monthly fall in many months after slipping last week.

Brent crude edged down US$0.08, or 0.2 per cent, to US$41.84 a barrel by 12.03am GMT (8.03am, Singapore time) after dropping 2.9 per cent last week. US West Texas Intermediate (WTI) was at US$40.12 a barrel, down US$0.13 cents or 0.3 per cent, following a 2.1 per cent decline last week.

Brent is on track to fall for the first month in six while WTI is headed for its first monthly loss since April as renewed mobility curbs in various countries following more coronavirus cases cloud the outlook on fuel demand recovery.

"New COVID-19 case numbers are accelerating in major US states, renewing fears of mobility restrictions challenging the ongoing oil demand recovery in the last quarter," ANZ analysts said in a note.

READ: Global COVID-19 death toll passes 1 million

More crude is also being exported from OPEC producers Iran and Libya despite efforts by the Organization of the Petroleum Exporting Countries and their allies to limit output.

Still, OPEC Secretary General Mohammad Barkindo said on Sunday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year.

In Norway, one of the largest oil producers outside OPEC, a workers' strike which may take place on Sep 30 is threatening to cut Norway's production by 900,000 barrels per day, the Norwegian Oil and Gas Association said on Friday.

Also, one of the heaviest clashes between Armenia and Azerbaijan since 2016 broke out over weekend, reigniting concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets.

Source: Reuters/dv

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