Oil Prices Plummet Amid Increase of COVID-19 Cases Across the Globe

© REUTERS / Lucy NicholsonA pumpjack brings oil to the surface in the Monterey Shale, California, April 29, 2013
A pumpjack brings oil to the surface  in the Monterey Shale, California, April 29, 2013 - Sputnik International
Last month saw a drop in oil prices which came against the backdrop of fears pertaining to an increase in crude and fuel inventories in the US.

Oil prices plummeted on Monday amid an ongoing spike in coronavirus cases in many countries across the world.

The benchmark Brent crude LCOc1 dropped by 24 cents, or 0.6%, to $42.90 per barrel, while West Texas Intermediate (WTI) futures CLc1, in turn, were down 23 cents, or 0.6%, to $40.36 earlier in the day.

Reuters cited Rystad Energy’s head of oil markets Bjornar Tonhaugen as saying that “as things stand, prices are not likely to produce any sizeable gains very soon, until a signal that the [coronavirus] pandemic slows down”.

He added that although COVID-19 “has been cornered” in Europe, "the Americas and some Asian states have still a long way to go”.

FILE PHOTO: A Bharat Petroleum oil pump station displays the price of unleaded petrol (0.89$) and Diesel (0.66$) as a pedestrian walks past in New Delhi, India, February 3, 2016. - Sputnik International
Analysts Say Oil Price May Rebound to $150 by 2025 After This Year's Collapse, WSJ Reports
The number of confirmed coronavirus cases has, meanwhile, surged to more than 14 million, according to both the World Health Organisation and John Hopkins University. The highest daily increase was registered in the US, India, Brazil, South Africa, and Mexico.

Monday's developments followed last month’s drop in oil prices after reports about oversupply in US crude earlier in June.

This was preceded by an earlier adopted OPEC*+ agreement that stipulated global oil production cuts entering force on 1 May, a few weeks after US crude prices plunged below zero per barrel, in a historic drop that also caused the collapse of the global oil market.

The 12 April OPEC+ deal obliged the signatories to reduce crude production by 9.7 million barrels per day in May and June. Thereafter, production will be cut by 7.7 million barrels per day until the end of 2020, and by 5.8 million barrels daily from January 2021 until April 2022.

*OPEC, Organisation of Petroleum Exporting Countries, an energy cartel which includes Saudi Arabia, Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of Congo, United Arab Emirates, and Venezuela. The "+" denotes additional exporters cooperating with OPEC including Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan, and Sudan.

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