By Adedapo Adesanya
Oil prices pointed south on Monday as investors worried about a second wave of coronavirus infections that could threaten the markets even as demand shows signs of slow recovery.
Even the announcement of new output cut from Saudi Arabia and Kuwait could not do much to lift prices during the trading day.
However, the market welcomed development, expressing optimism that it could play a part in solving the oversupply problem threatening the crude oil space.
At market yesterday, the Brent crude futures fell $1.34 or 4.3 percent to $29.63 per barrel, while the US West Texas Intermediate (WTI) crude fell 60 cents or 2.43 percent to $24.14 per barrel.
Global oil demand has slumped by about 30 percent as the coronavirus pandemic brought about restrictions to movement across the world and this grew inventories globally, with storage soon to fill up.
While crude futures prices have fallen more than 55 percent alone this year, prices recorded gains during the past two weeks, supported by a modest rebound in demand as some travel restrictions were eased.
Now, a second wave of the pandemic threatens to upturn everything. Lockdowns have been reimposed in China and South Korea on Monday after a spike in new infections of the virus, which started in China last December.
According to reports, at least 15 cases of the virus have been confirmed in Shulan, China, prompting officials to quarantine 290 people connected with the outbreak, enforce martial law and lock down the northeastern city.
Meanwhile, South Korea, which eased social distancing requirements last week, saw a spike in cases linked to nightclubs in Seoul, the capital city.
Prices of the commodity received a boost, however, after Saudi Arabia, the largest producer of the Organisation of the Petroleum Exporting Countries (OPEC), directed its national oil company, Saudi Aramco, to reduce its production for June by an extra 1 million barrels per day.
This was followed by its counterpart, Kuwait, pledging to slash its production by 80,000 barrels per day in June, on top of the cut already agreed under a pact by major oil producing countries.
An allied producer group known as OPEC+ agreed to cut production from May 1 by about 10 million bpd in an effort to support prices.
Modupe Gbadeyanka