Oil prices dropped on Monday as steep spikes in new global coronavirus cases drove some countries to resume partial lockdowns, heightening fears about the pace of economic rebound and demand for fuel.
Brent crude futures had fallen by 12 cents or 0.29% to $40.90 per barrel at 11:25 West Africa Time while U.S. West Texas Intermediate (WTI) was down by 4 cents or 0.10% at $38.45 a barrel.
Nigeria’s chief crude grade, Bonny Light shed 33 cents or 0.81% to close at $40.37 per barrel at the last session. However, another major national grade, Qua Iboe, $1.06 or 2.64% to close at $41.21 a barrel.
“Both contracts (Brent and WTI) are coming under stronger pressure this morning as the spectre of lockdowns returns,” said JBC Energy.
Death toll from the coronavirus pandemic climbed past half a million people on Sunday, according to a Reuters tally.
Nations like the United States, India and Brazil are seeing a new wave of infections, prompting authorities to partially reintroduce lockdowns, in what analysts say could be a recurring trend in the coming months and into 2021.
“Looking ahead, anxiety is likely to remain heightened as the epic fight against the coronavirus pandemic continues. This spells bad news for risk assets (such as oil) which will inevitably remain under pressure,” Stephen Brennock of oil broker, PVM said.
Experts said oil prices were also facing pressure from poor refining margins and large stockpiles.