Even as higher oil prices prompt producers to resume drilling, number of operating oil and natural gas rigs dropped to record low last week
SINGAPORE: Oil prices fell for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.
Brent crude dropped 66 cents, or 1.6%, to $40.36 a barrel by 1150 GMT while U.S. crude was at $37.86, down 63 cents, or 1.6%.
Brent crude is set to end June with three consecutive monthly gains as OPEC+ supply cuts and as oil demand improved after countries across the globe eased lockdown measures.
However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.
“The market continues to fret about the recovery in demand as authorities reviewed reopening strategies,” ANZ analysts said, referring to the three most populous U.S. states - Texas, Florida and California.
Despite efforts by the Organization of the Petroleum Exporting Countries and their allies including Russia to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs.
“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ said.
Even as higher oil prices prompt some producers to resume drilling, the number of operating oil and natural gas rigs dropped to a record low last week.
U.S. shale oil pioneer Chesapeake Energy Corp (CHK.N) filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.