Oil prices have reportedly registered a sharp decline as compared to the previous session, owing to the escalation in number of COVID-19 cases in some countries. This has apparently undermined hopes for a steady recovery in the global oil demand as there has been a fall of 0.6 per cent or 25 cents in Brent crude LCOc1. The crude amounted to $39.53 per barrel after having registered a drop of over 5 per cent the previous day.
According to sources, the U.S. crude CLc1 has been down by 0.8 per cent or 28 cents, amounting to a cost of around $36.48 a barrel, reportedly a fall of around 8 per cent as compared to the previous session.
The outbreak has been reportedly instrumental in threatening hopes for a global economic recovery that could decrease fuel demand from aviation gas to diesel, even though the slump in prices could lift refinery profits back into the positive territory, stated Eurasia.
That would be a significant move and a potential sign for the industry as the crude processing capacity reductions and production processes have ultimately met their objective of adjusting the industry in alignment with the reduced demand.
While both the major oil benchmarks have been trading a low of around three months, the coronavirus pandemic has been consistently flaring up causing surging cases in Spain, Great Britain, India, and several parts of the United States.
As per reports, cuts in record supply by the Organization of Petroleum Exporting Countries and its allies have been effective in supporting oil prices, with grim economic figures being conveyed almost on a daily basis.
Of late, the factory gate prices in China have fallen for a seventh consecutive month in August even though at the slowest annual pace since the month March. This has effectively caused the industries in the economy to continue their recovery from the COVID-19-induced downturn, suggest sources.