Oil. Picture: REUTERS
Oil. Picture: REUTERS

London — Oil prices fell on Monday as coronavirus cases increased in many countries across the globe, but investors remained cautiously optimistic about ongoing talks over a EU-wide recovery fund to revive economies affected by the pandemic.

Brent crude was down 19 US cents, or 0.4%, at $42.95 a barrel by 8.45am GMT, and US oil slipped 19 cents, or 0.5%, to $40.40 a barrel.

“As things stand, prices are not likely to produce any sizeable gains very soon, until a signal that the pandemic slows down. And even though in Europe the virus has been cornered, the Americas and some Asian states have still a long way to go,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

More than 14.5-million people have been infected by the novel coronavirus globally and more than 604,000 have died of Covid-19, the disease caused by the pathogen, according to a Reuters tally.

Investors are looking to the EU summit for trading cues, with leaders showing the first signs of compromise over carving up a proposed €750bn recovery fund to revive economies.

Japan's oil imports fell 14.7% in June from the same month a year earlier, official figures showed on Monday. The drop was not as pronounced as in May when they fell 25%, year on year.

Also underscoring the effect of the virus, Japan's exports plunged 26.2% in June from a year earlier, ministry of finance data showed on Monday.

While fuel demand has recovered from a 30% drop in April after countries around the world imposed strict lockdowns, usage is still below pre-pandemic levels. US retail petrol demand is falling again as infections rise.

In the US, energy drillers cut the number of oil and natural gas rigs operating to a record for an 11th week in a row, data showed on Friday.

Rising tension between China and the US also put pressure on prices.

China's embassy in Myanmar on Sunday accused the US of “outrageously smearing” the country and driving a wedge with its Southeast Asian neighbours over the contested South China Sea and Hong Kong.

Saudi Arabia's 84-year-old ruler, King Salman bin Abdulaziz, has been admitted to hospital, suffering from inflammation of the gall bladder. The king has ruled the world's largest crude oil exporter and close US ally since 2015.

Reuters

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