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”.
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.