By Peter Nurse
Investing.com — Crude oil prices weakened Monday as concerns that rising Covid-19 cases will slow the global recovery outweighed the possibility of a tight market as top producers squabble about production levels.
By 9:25 AM ET (1325 GMT), futures traded 1% lower at $73.80 a barrel, while the contract fell 0.9% to $74.86.
U.S. Gasoline RBOB Futures dipped 0.7%, to $2.2750 a gallon.
The spread of coronavirus variants and unequal access to vaccines threaten the global economic recovery, finance chiefs of the G-20 large economies warned on Saturday. This follows the growth of the number of cases of the Covid-19 virus, mainly in Southeast Asia, but also in the West.
The U.S. recorded the highest number of cases over the weekend since May, with the number of people catching the virus, particularly the highly-transmissible delta variant, having risen in more than half of the states over the past two weeks.
“After a brisk May and great June, I’m starting to feel like we’re going to see gasoline demand relax a bit more, I think we’ve seen our peak (July 4), and it’s unlikely we’ll exceed it,” tweeted Patrick de Haan, an analyst at GasBuddy.
That said, prices are still not far removed from the highs last reached in October 2018, helped by the tightening of oil supplies globally.
Last week the U.S. detailed that the country’s crude inventories fell by just under 7 million barrels last week, while there is still plenty of uncertainty over the production plans of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, for August, and beyond.
“It appears as if the UAE and Saudi Arabia are still struggling to come to an agreement. Therefore prices are likely to remain volatile until we have some clarity around this issue,” said analysts at ING, in a note.
The latest , released Friday, showed speculators reduced their net long positions in ICE (NYSE:) Brent by 4,796 lots over the last reporting week, while the Nymex WTI contract saw significantly more liquidations over the week, with speculators reducing their net long by over 33,000 lots.
“The bulk of this reduction was driven by longs liquidating, rather than fresh shorts. It would appear, given the uncertainty over OPEC+, that speculators have decided to take some risk off the table,” added ING.
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