Oil piles on losses following OPEC+ deal to boost supply, rising COVID cases
Oil slumped $5 a barrel on Monday, closing out its worst day since March, after an OPEC+ agreement to boost output stoked fears of a surplus just as rising COVID-19 infections once again threaten demand.
Crude oil's year-long recovery has stalled out over the last two weeks due to the prospect of new supply undermining the case for higher prices. With the Delta variant of the coronavirus spreading worldwide - fuelling a 70% rise in U.S. infections last week - funds bailed out of long positions on Monday across multiple risk asset groups, including stocks and the dollar.
Brent crude settled at $68.62 a barrel, losing $4.97, or 6.8%.
U.S. oil futures for August delivery, which expires on Tuesday, settled at $66.42, down $5.39, or 7.5%.
The September U.S. crude oil futures contract settled at $66.35, down $5.21.
The Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, reached a compromise on Sunday to increase oil supply from August to cool prices, which had hit their highest level this month in more than two years.
It is still unclear how the variant will affect oil demand. Consumption in the United States, the world's largest consumer of fuel, has steadily strengthened in recent weeks, but India, the third-biggest importer, has cut back imports due to oversupply and fears of reduced demand.
Reference: Reuters
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