Picture used for illustrative purpose. File
Oil prices dipped on Monday as rising coronavirus cases upset hopes for a smooth recovery in fuel demand, with the main crude benchmarks on track for their first monthly falls in multiple months after slipping last week.
Brent crude fell 37 cents, or 0.9%, to $41.55 a barrel by 0652 GMT after dropping 2.9% last week. US West Texas Intermediate was at $39.86 a barrel, down 39 cents or 1%, following a 2.1% decline last week.
Brent is on track to fall for the first month in six while WTI is headed for its first monthly loss since April as the reimposition of mobility curbs in some countries clouds the outlook on fuel demand recovery.
"New COVID-19 case numbers are accelerating in major U.S. states, renewing fears of mobility restrictions challenging the ongoing oil demand recovery in the last quarter," ANZ analysts said in a note.
Russian Energy Minister Alexander Novak said on Monday that the global oil market has been stable for the past few months and the demand-supply balance restored, but warned of the risks of a second wave of COVID-19 cases.
More crude is also being exported from OPEC producers Iran and Libya despite efforts by the Organization of the Petroleum Exporting Countries and their allies to limit output.
Last week, US energy firms also added oil and natural gas rigs for a second week in a row, according to Baker Hughes.
Still, OPEC Secretary General Mohammad Barkindo said on Sunday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year.
The one factor that may offer some support to the market is the prospect of strike action, ING analysts said.
In Norway, one of the largest oil producers outside OPEC, a workers' strike that may take place on Sept. 30 is threatening to cut its production by 900,000 barrels per day, the Norwegian Oil and Gas Association (NOG) said on Friday.
Also, one of the heaviest clashes between Armenia and Azerbaijan since 2016 broke out over the weekend, reigniting concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets.
The US Commodity Futures Trading Commission (CFTC) said on Friday that money managers raised their net long U.S. crude futures and options positions in the week to Sept. 22.
"The bulk of the buying that was seen over the week was driven by short-covering, with the gross short position falling by a little over 20k lots," the ING analysts said. Investors may have heeded the Saudi oil minister's warning against shorting the oil market, they said.
Opec and its allies agreed on Thursday to keep current production cuts until further review in December, with the Kingdom of Saudi Arabia pledging to further strengthen its voluntary production adjustment to 9.890 million bpd in October.
The United Arab Emirates Energy Minister Suhail Mohamed Al Mazrouei congratulated the new Saudi Arabian Rnergy Minister, Prince Abdulaziz Bin Salman, in a tweet.
Brent crude fell 35 cents, or 0.8%, to $43.44 a barrel while West Texas Intermediate (WTI) crude was down 49 cents, or 1.2%, to $40.47 per barrel.
The UAE non-oil trade volume could grow by up to 12.9% year-over-year in 2021, supported by an expected uptick in maritime transport activity and other positive global economic trends,
Dubai Electricity and Water Authority (Dewa) has completed 87.73 per cent of its project to extend its water transmission network by 36 kilometres across Dubai, at a total cost of about Dhs256 million.
The State Bank of Pakistan (SBP) has announced its bi-monthly monetary policy on Friday and decided to maintain its policy rate at 7 per cent, according to a statement issued by the bank.