Oil is Falling on Uncertainty Surrounding The Recovery of Demand

Oil prices fell on Monday, September 28, as the high number of coronavirus cases dampened hopes for a smooth recovery in fuel demand, while the two major benchmarks are moving towards recording their first monthly decline in several months after falling last week.

By 06:52 GMT, Brent crude was down 37 cents, or 0.9%, to $ 41.55 a barrel, after falling 2.9% last week. US West Texas Intermediate crude reached 39.86 dollars a barrel, down 39 cents, or 1%, after dropping 2.1% last week.

Brent is on a downward trend for the first month in 6 months, while WTI crude is heading towards its first monthly loss since April due to the re-imposition of movement restrictions.

Russian Energy Minister Alexander Novak said today that the global oil market has stabilized over the past few months and that the balance between supply and demand has been restored, but he warned of the risks of a second wave of Covid-19 cases.

More crude is being exported from OPEC members Iran and Libya, despite efforts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to curb production.

Last week, US energy companies added drilling rigs for oil and natural gas for the second week in a row, according to Baker Hughes.

But Mohamed Barkindo, OPEC Secretary-General, said on Sunday that commercial oil inventories in the Organization for Economic Cooperation and Development countries are expected to stabilize at just over the five-year average in the first quarter of 2021, before falling below that level for the rest of the year.