Rising Covid cases sparked fears of a demand slowdown, sending oil prices down on Monday, adding to last week’s severe losses. West Texas Intermediate oil futures fell more than 4% at one point, reaching a low of $65.15, the lowest level since May. During afternoon trading, the contract regained some of its losses, eventually settling 2.64 percent lower at $66.48 per barrel. After touching a low of $67.60, international benchmark Brent crude finished at $69.04 per barrel, down 2.35 percent.
Bank of America said, “The biggest challenge for oil markets remains the uncertainty around Covid as the ‘delta variant’ has made for the highest daily case counts since early 2021.” Both contracts fell more than 7% last week, marking their lowest week since October. The drop occurred as a result of concerns about demand as well as an unexpected increase in oil stockpiles in the United States.
Crude stocks rose by 3.6 million barrels in the previous week, according to the US Energy Information Administration, but analysts polled by FactSet expected a 2.9 million barrel drop. Stocks of gasoline, on the other hand, fell by 5.3 million barrels more than predicted. On Monday, crude was further pulled down by data from China. In July, the country’s export growth unexpectedly slowed, while imports increased by 28.1 percent over the previous year. This was below than expectations, which called for a 33 percent increase.
According to experts at Commerzbank, China, the world’s second largest oil user, imported 9.7 million barrels per day in July, the fourth consecutive month below 10 million bpd. The price decline is continuing [Monday] amid renewed demand concerns. Market participants are concerned about rising coronavirus numbers in Asia, since this could compel China’s government to take harsh actions to adhere to its rigorous zero-coronavirus policy.