Oil falls as worsening pandemic threatens recovery

TOKYO: Oil prices dipped on Monday, weighed down by the prospect that a rise in the pace of coronavirus infections could derail a recovery in fuel demand.

Brent crude was down 10 cents, or 0.2%, at $43.04 a barrel by 0047 GMT, after dropping slightly last week. U.S. oil was off by 6 cents, or 0.2%, at $40.53 a barrel, after gaining 4 cents last week.

“With global daily COVID-19 case counts still rising and the U.S. Sunbelt most populous states showing little success in bending and containing the (epidemic’s) curve, concerns about the post-COVID recovery pace are limiting the upside for oil,” said Stephen Innes, chief global markets strategist at Axicorp.

More than 14 million people have been infected by the novel coronavirus globally and nearly 602,000 have died, according to a Reuters tally.

While fuel demand has recovered from a 30% drop in April after countries around the world imposed strict lockdowns, usage is still below pre-pandemic levels. U.S. retail gasoline demand is falling again as infections rise.

Japan’s oil imports fell 14.7 percent in June from the same month a year earlier, official figures showed on Monday. The drop was not as pronounced as in May when they fell 25%, year on year.

Still, exports from the world’s third-largest economy slumped by a double-digit decline for the fourth month in a row as the coronavirus pandemic took a heavy toll on global demand.

In the U.S., energy drillers cut the number of oil and natural gas rigs operating to a record for an 11th week in a row, data showed on Friday.