Upcoming supply increase of OPEC+ raises oversupply fears while COVID-19 continues blurring oil demand outlook
Oil prices fell on Monday as rising COVID-19 Delta variant cases continue to dampen the prospects of higher oil demand while raising the possibility of renewed restrictions followed by lower mobility.
International benchmark Brent crude was trading at $72.65 per barrel at 0727 GMT for a 1.07% loss after closing Friday at $73.44 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $71.12 a barrel at the same time with a 1.31% fall after ending the previous session at $72.07 per barrel.
Oil prices started the week on a bearish track after remaining relatively stable last week as investors assessed the state of the demand recovery in different parts of the world.
Market pessimism was fueled by the possibility of rising virus cases particularly from the more contagious and deadly variant of Delta, which is set to usher in new restrictions around the world.
The Tokyo Olympics, which was initially planned for the summer of 2020 but was then postponed to this year due to the pandemic, is taking place under the shadow of COVID-19. So far, 148 people including three athletes were tested positive.
According to official data on Monday, Pakistan reported more than 3,700 new coronavirus cases, the highest single-day toll since May 22, as the Delta variant is spreading across the country.
To combat an increase in COVID-19 cases, Thailand, Vietnam, and Algeria are imposing citywide curfews, while senior officials in Germany have discussed the possibility of tougher restrictions for the unvaccinated.
Anthony Fauci, the top US infectious disease expert, warned that the US is moving in the “wrong direction” to combat the pandemic’s new wave.
The recent increase in virus cases comes amid an anticipated increase in oil supply from the Organization of Petroleum Exporting Countries and its allies (OPEC+) from the beginning of August.
The OPEC+ countries had earlier in July announced their decision to raise output by 400,000 barrels as of August.