By Adedapo Adesanya
Oil prices pulled back a bit during the last trading session of last week as the market continues to go back and forth after the resurgence of the coronavirus cases in crucial markets around the world, spelling doom for demand.
However, this week may prove difficult as the market is beginning to overlook the cuts of the Organisation of Petroleum Exporting Countries and its allies (OPEC+) as conditions could worsen if a second-wave of COVID-19 causes more disruptions in demand.
There have been expectations for a stable oil regime as traders gave producers the benefit of the doubt following an extension to the current level of reduction and impressive compliance.
But this has lately been overlooked as worries over the resurgence of the coronavirus pandemic has taken grip of the market as top oil consuming states in the United States went into partial lockdown.
Cases of COVID-19 outbreaks were also reported in areas that include Australia, New Zealand, and China, prompting authorities to impose restrictions again.
In addition, other factors that could encourage investors to lighten up long positions include poor refining margins, high oil inventories and the resumption of US production.
A new survey by the Dallas Federal Reserve Bank showed more than half of oil executives in the US who cut production in previous months are expected to resume some output by the end of July.
The American Petroleum Institute (API) reported last week another build in crude oil inventories, this time of 1.7 million barrels for the week ending June 19 after market analysts were looking for a small inventory build of 299,000 barrels.
Also, another industry player in the US, the Energy Information Association (EIA) reported last Wednesday a 1.4 million-barrel increase in crude oil inventories for the week to June 19, with fuel inventories booking mixed results. Traders were looking for a build of 1.2 million barrels. This spells worries for traders who may have sell lower.
This seems to be the scenario as the market opened with the International market, Brent Crude is down 2 percent at $40.19 per barrel while the WTI is trading down 1.87 percent at $37.77 per barrel.
