(3 minutes read)
· Oil chipped away last week’s gain riding on the back of
potential resurgence in global coronavirus cases. Oil futures traded
down 2.3% in New York to trade and hovered around US $24 a barrel.
· Oil producing countries are veering around the idea to go
for another cut in production to balance it with the current demand.
· As a result, in the US, producers have brought down the
number of drilling rigs by 33 to 292 last week, the lowest level since
September 2009.
Oil chipped away last week’s gain riding on the back of potential
resurgence in global coronavirus cases. Oil futures traded down 2.3%
in New York to trade and hovered around US $24 a barrel. The immediate
reason for the fear of relapse came from China, which put Shulan, a
city near the North Korean border, in lockdown over the weekend. In
the meantime, the US White House reported a case of the Covid-19 even
while President Donald Trump encouraged Americans to return to work.
India’s oil consumption was down at 46%, which has pulled down the oil
imports.
Added to this is the fear that the relaxation in the lockdown can lead
to another spurt in the pandemic, which can pull down the oil demand
further. Consumption at the rock bottom in China and India two major
consumers. Oil producing countries are veering around the idea to go
for another cut in production to balance it with the current demand.
As a result, in the US, producers have brought down the number of
drilling rigs by 33 to 292 last week, the lowest level since September
2009.
Many are predicting that the oil price would rule low for quite some
time, notwithstanding the occasional spikes, which can be at best
dubbed as inconsistent or illusory exuberance. The oil prices, they
say, can pick up only when world production is back on rail,
transportation networks are restored and airlines commence their
services in full swing. When that will happen is the trillion dollar
question.
