Oil prices have reduced due to increasing uncertainty over global fuel demand recovery as the number of new coronavirus (Covid-19) cases surge in many countries.
Brent crude futures dropped by $0.11 to reach $43.26 a barrel while US West Texas Intermediate (WTI) crude futures decreased by $0.4 to reach $40.71 a barrel, Reuters reported.
India is now the third country in the world to record more than one million cases of Covid-19, with US and Brazil occupying the first and the second positions in the list, respectively.
On 17 July, the US reported at least 75,000 new Covid-19 cases, a record increase in a day.
Spain and Australia reported a significant daily jump in infections in over two months.
Both the Brent and the WTI benchmarks fell 1% on 16 July, after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to ease record supply cuts from next month.
The record supply cuts of 9.7Mbpd implemented earlier this year will be reduced by 2Mbpd starting from next month.
Reuters cited Commonwealth Bank of Australia commodities analyst Vivek Dhar as saying that the actual increase in output will be closer to 1Mbpd. Countries such as Iraq, which produced more than its commitment to cut supply in May and July, agreed for higher reductions in August and September.
Analysts expect the market to remain in the range between $40 and $45 a barrel, due to uncertainty over fuel demand as new lockdowns may be imposed to contain the spread of Covid-19 cases.
Dhar added: “The problem with the market right now is prices have got to a level where we’re concerned US supply is going to come back.”