Oil slipped for a second day on signs of a slower emergence from lockdown in some corners of the globe.
Futures fell as much as 2.6% in New York as growing outbreaks of coronavirus signaled red flags for oil demand. California, one of the largest gasoline-consuming states in America, said Monday that it would pull back on reopening efforts. In Asia, Hong Kong imposed its strictest social distancing measures yet and Japan said a new state of emergency is possible if infections increase.
In the longer-term, OPEC expects demand for its crude to rebound next year, surpassing levels seen before the pandemic, as rival producers struggle to revive output. An OPEC+ committee meets Wednesday to discuss easing record supply curbs that have helped the market recover, with the group seeing broad compliance with pledged cuts in June. OPEC+ is expected to stick with plans to taper the cuts from August even as the virus rages in many parts of the world.
“Everybody agrees it’s very early days," Amrita Sen, chief oil analyst at Energy Aspects, said in a Bloomberg Television interview. “It’s not going to be a straight-line recovery with the resurgence in cases in the US in particular."
The OPEC+ committee will consider whether the alliance should keep 9.6 million barrels of daily output off the market for another month, or taper the cutback to 7.7 million barrels as originally planned. Members are leaning toward the latter option, according to several national delegates who asked not to be identified.
Meanwhile, data showed the extent of China’s binge on cheap crude earlier in the year. The world’s top importer bought a record 13 million barrels a day for June arrival, according to customs data, as a long line of vessels carrying cheap oil bought months ago wait to offload shipments.
This story has been published from a wire agency feed without modifications to the text.