Oil prices dropped on Monday on a record daily rise in global coronavirus cases with big spikes in infections over the weekend in the United States, while traders await an OPEC technical meeting expected to recommend an easing of supply cuts.
Brent crude LCOc1 fell 61 cents, or 1.4%, to $42.63 a barrel by 1127 GMT, though prices have been hovering around $42 for a couple of weeks. U.S. crude CLc1 was down 64 cents, or 1.6%, at $39.91.
“Pricing pressures are locked in a holding pattern and will remain so until the coronavirus pandemic is brought under control. Until then, there will continue to be a lack of conviction in upside potential,” said Stephen Brennock of oil broker PVM.
The World Health Organization reported a record daily increase in global coronavirus cases on Sunday, with the total up by more than 230,000.
In the United States, infections surged over the weekend as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state.
Oil traders also remained on edge as the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet on Tuesday and Wednesday to recommend levels for future supply cuts.
OPEC and allies including Russia, a group known as OPEC+, are expected to ease their production cuts to 7.7 million barrels per day (bpd) after a recovery in global oil demand. OPEC+ cut output by a record 9.7 million bpd for May, June and July.
Libya, meanwhile, re-imposed force majeure on all oil exports on Sunday because of a renewed blockade by eastern forces. The move comes only two days after Libya exported its first crude cargo in six months. (Graphic: Libya oil production, here)
UBS analyst Giovanni Staunovo said oil prices were behaving in a counterintuitive way on Monday, ignoring renewed blockage on Libyan production, a weaker dollar and higher equity markets.
“With Brent currently unable to break out of the $40-$44 per barrel trading range and with open interest in oil futures declining, it seems some investors are taking profit and look for alternatives in other asset classes,” Giovanni said.
The military of Yemen’s Houthi group said it had attacked a large oil facility in an industrial zone in the southern Saudi city of Jizan, but oil prices were not greatly affected by the news.
Rising tension between the United States and China over the COVID-19 pandemic and other issues also pressured prices.
China on Monday announced sanctions against U.S. officials and entities in retaliation for Washington’s sanctions against senior Chinese officials.