Oil has continued to retreat more than 2 percent on Monday following its first weekly decline since late April as a new coronavirus outbreak in China and spikes in cases elsewhere added to worries about the second wave of infections will disrupt a nascent economic rebound.
New York's futures were down under $35 per barrel last week after shedding 8.3 percent. Beijing closed the city's largest fruit and vegetable supply center and locked up nearby residential districts over the weekend after dozens of locals linked with the market were found to have contracted the disease.
Brent crude futures fell by 89 cents, or 2.3 percent, to $37.84 a barrel, while the US West Texas Intermediate crude futures were down from $1.18 to $35.08 a barrel, or 3.3 percent.
Last week the oil benchmarks dropped around 8 percent, their first weekly declines since April, as cases of fresh coronavirus started to surface.
More than 25,000 new cases in the US were reported on Saturday alone over the weekend as more states registered new infections and hospitalizations. Florida is one of the major states that continue to witness sharp surges in cases.
On the back of the OPEC+ agreement, markets started out strongly last week to extend their production cuts. However, traders have begun doubting demand throughout the week, clouding the potentially strong effects of the supply reduction extension.
The US central bank's dreary forecast for the economy, worries about a surge in new COVID-19 cases, and rising US supply were among the major concerns.
Concerns about future demand rose late Wednesday after the U.S. Federal Reserve said U.S. unemployment is set to reach 9.3 percent by end of the year and stated it would take years to fall back, while interest rates are expected to remain close to zero at least by 2021.
Despite rising demand for oil products in the US, gross domestic product estimates have elevated worries about the possible strong demand for the commodity, analysts stated.
On June 10, the US Federal Open Market Committee projected that US GDP could constrict 6.5 percent this year, while the Organization for Economic Cooperation and Development disclosed that it expects worldwide GDP to fall by 6 percent or 7.6 percent in the case of a second wave of coronavirus infections this year.
In the US, heavy demand for construction work increased by 3.4 percent in May, but the oil and gas industry did not contribute to this rally. Since the outbreak of the pandemic in the US at the beginning of February, construction jobs in oil and gas have fallen by over 10 percent, analysts said.
