Oil Drop Persists as Virus Cases Hit New High And Threatens Demand

By Bryan Wong

Investing.com – Oil continued its drop on Monday morning in Asia, following last week’s plummet. Investor worries over demand were amplified after COVID-19 cases surpassed ten million and deaths surpassed half a million as of June 29, according to Johns Hopkins University data.

Brent oil futures dropped 1.86% to $40.17 by 12:59 AM ET (04:59 AM GMT) and WTI futures also slid 2.10% to $37.69.

The U.S. is seeing a big surge in virus cases with some states hitting an all-time high. Only two states- Connecticut and Rhode Island, reported a decline in new cases compared to last week.

Asia also recorded a stark increase in infections in countries such as Indonesia, Philippines, and India, with India recording its biggest surge in cases over 24 hour period for a second consecutive day. The country recorded 9,906 new cases as of June 29.

Meanwhile, Chinese state-owned oil refining giants including China Petroleum (NYSE:SNP)&Chemical Corporation, PetroChina., Cnooc and Sinochem Group are reportedly in discussions to form a crude oil purchasing group to increase their collective bargaining power and avoid bidding wars.

Although the discussions are still private and ongoing, the proposal is said to have already won the support of the Chinese central government and relevant industry watchdogs.

If the formation materializes, the group will be the latest joint procurement initiative in China’s commodity sector since 2003 and could drastically increase China’s influence in the oil market.

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