By Peter Nurse
Investing.com - Oil markets weakened Monday, amid concerns the resurgence of new coronavirus infections in a number of key countries in the world, including the United States, could weigh on the recovery of fuel demand.
At 9:20 AM ET (1320 GMT), U.S. crude futures traded 4.1% lower at $34.77 a barrel. The international benchmark Brent contract fell 2.7% to $37.70.
Over the weekend, China reported a new outbreak in Beijing’s Xinfadi wholesale food market, after nearly two months with no new cases, while Japan’s capital Tokyo reported Sunday its highest number of new cases in around a month.
In the United States, the largest consumer of oil, more than 25,000 new cases were reported on Saturday alone as more states reported new infections and hospitalizations.
"The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought," ING's head of commodities strategy Warren Patterson said.
U.K.-based oil major BP (NYSE:BP) also sees the coronavirus pandemic having a long-term impact on energy demand, as it announced billions of dollars of write-offs and impairments after reducing its price assumptions
“With the Covid-19 pandemic having continued during the second quarter of 2020, BP now sees the prospect of the pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period,” the company said.
There should be plenty of information available this week to illustrate the state of the crude market, with the IEA set to release its monthly oil market report on Tuesday, which will include its outlook for the remainder of the year, and into 2021.
This will be followed by OPEC’s monthly report on Wednesday, where the group will share its outlook and production estimates for May.
Finally, the OPEC+ Joint (NASDAQ:JYNT) Technical Committee and Joint Ministerial Monitoring Committee will be meeting on Wednesday and Thursday respectively, discussing the ongoing record production cuts and see whether countries have delivered their share of the reductions.