Oil prices remain mixed as an increase in Covid-19 cases has cast a shadow over fuel demand in the US.
Brent crude inched higher due to tighter supplies while US WTI futures dropped due to concerns that surge in Covid-19 cases could curb fuel demand.
According to Reuters, Brent crude increased $0.18 or 0.4% to touch at $42.98 a barrel, while US West Texas Intermediate (WTI) crude futures were down by $0.23 or 0.6% at $40.42 per barrel.
Singapore OCBC Bank economist Howie Lee was quoted by the news agency: “There will be some kind of decline in demand if cases were to increase as people will stay at home. The pace of US demand recovery will not be as steep as expected.”
According to a Reuters tally, 15 US states reported a record high in new Covid-19 infections in the first four days of this month.
Parties over the 4 July holiday weekend could possibly lead to another surge in cases, stated Reuters.
ING said in a note: “We will get a better idea of what impact tighter restrictions in several states have had on gasoline demand with the Energy Information Administration (EIA) report this week.”
The OPEC+ group has been reducing supply by approximately 9.7Mbpd since 1 May.
Earlier last month, the group also agreed to extend output cuts until the end of this month.
Post this month, the cuts are due to taper to 7.7Mbpd until the end of this year.
Meanwhile, oil production in the US is declining as the number of operating oil and natural gas rigs in the US fell for a straight ninth week.