Oil prices slid down yesterday as the Covid19 pandemic and tensions arising from the US and China feud pushed investors towards what investors described as safe-haven assets.
The slide in oil prices mirrored moves in broader financial markets in Asia amid concerns about escalating tensions between the world’s two biggest economies following the closure of embassies in Houston and Chengdu. Global coronavirus cases, meanwhile, exceeded 16 million.
Reuters reported that Brent crude dipped 10 cents, or 0.2%, to $43.24 a barrel while U.S. West Texas Intermediate (WTI) crude was at $41.24 a barrel, down 5 cents. Still, Brent is on track for a fourth straight monthly gain in July while WTI is set to rise for a third month as unprecedented supply cuts from the Organization of Petroleum Exporting Countries (OPEC), and its allies including Russia, as well as in the United States, propped up prices.
Oil demand has also improved from the deep trough seen in second quarter, supporting prices, although the recovery path is uneven as resumption of lockdowns in the United States and other parts of the world is capping consumption.
Reports said investors are also watching for any impact from storm Hanna which battered the Texas coast over the weekend, threatening heavy rains in Texas and Mexico. Oil and gas producers and refiners said on Friday that they did not expect the storm to affect operations.
The rebound in oil prices has also encouraged the world’s top producers to increase output and exports again. The U.S. oil rig count rose last week for the first week since March after producers added one rig, Baker Hughes data showed, a sign that U.S. oil production decline may have bottomed out.
Russian oil exports from Western ports are set to rise 36% in August from July, according to the preliminary loading plan and Reuters’ calculations. The world’s top exporter Saudi Arabia again topped the chart of crude suppliers to China in June, supplying 2.16 million barrels per day, or nearly 17 per cent of China’s record imports that month.
By Chibisi Ohakah, Abuja
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