By Adedapo Adesanya
Crude oil prices weakened for the fourth session on Tuesday on the back of surging cases of coronavirus in Japan and a weak demand picture in Asia.
Japan, the world’s third-largest economy, extended its state of emergency in Tokyo and other regions on Tuesday and announced new measures covering seven more prefectures to counter a spike in COVID-19 infections that are threatening the medical system.
The country which is the fourth largest importer in the world added to a pessimistic market as the emergency will now cover nearly 60 per cent of its population.
These developments battered the price of the Brent crude oil futures yesterday by 51 cents or 0.73 per cent to $69.19 per barrel and crushed the West Texas Intermediate (WTI) crude oil futures by 71 cents or 1.06 per cent to $66.58 per barrel.
On Tuesday, in New Zealand, there was a new lockdown after the country’s first coronavirus case in six months was reported.
This is coming after news from China already bled the market as daily crude processing in the country, which is the world’s biggest oil importer, fell to its lowest in July since May 2020.
This happened as independent plants slashed production amid tighter quotas, high inventories and weakening profits.
In addition, China’s factory output and retail sales growth also slowed sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted businesses.
Last week, US President Joe Biden’s administration urged members of the Organization of the Petroleum Exporting Countries and its allies such as Russia to boost oil output to tackle rising fuel prices.
However, sources, according to a Reuters report, noted that the 23-member group believes oil markets do not need more crude oil than they plan to release in the coming months.
A rising supply in the US also added to the weak performance of the black gold as shale oil output is expected to rise to 8.1 million barrels per day in September, the highest since April 2020, according to government data.
The market will be expecting a piece of bullish news as market data from the US Energy Information Administration (EIA) point to a drop in crude inventories.
