Oil slides 2% on rising COVID-19 cases, ahead of OPEC+ meeting
NEW YORK — Oil prices fell 2% to a one-week low on Monday after hitting their highest since 2018 earlier in the session, as a spike in COVID-19 cases in Asia and Europe put a brake on the rally before this week’s OPEC+ meeting.
Brent futures fell $1.50 or 2.0% to settle at $74.68 a barrel, while US West Texas Intermediate (WTI) crude fell $1.14 or 1.5% to settle at $72.91.
Those declines pushed both contracts out of overbought territory and were their lowest closes since June 18. Earlier in the volatile session, both benchmarks rose to their highest levels since October 2018.
Indonesia is battling recordhigh cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.
Australia also reported on Sunday one of the highest numbers of locally acquired coronavirus cases this year, triggering lockdowns in some cities.
All eyes this week will be on the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to see what happens at their meeting on Thursday.
OPEC’s forecasts point to an oil supply deficit in August and the rest of 2021 as economies recover from the pandemic, suggesting OPEC+ has room to raise output.
But in a move that surprised some market watchers, Abu Dhabi National Oil Co. (ADNOC) will reduce the volume of crude it supplies to Asian term buyers by 15% in September, according to six sources with direct knowledge of the matter. It was not immediately clear why ADNOC would cut supplies.
And in Russia, oil production has declined so far in June from average levels in May despite an oil price rally and OPEC+ output cuts easing, two sources familiar with the data told Reuters on Monday.
Iran and the United States, meanwhile, were expected to resume indirect talks on reviving a 2015 pact over Tehran’s nuclear work. Agreement could lead to a lifting of US sanctions and more Iranian crude on the market. But tensions rose after US air strikes on Sunday against Iran-backed militias in Iraq and Syria.