Picture: REUTERS
Picture: REUTERS

Singapore/London — Oil prices edged lower on Monday as rising coronavirus cases and tension between the US and China pushed investors towards safe-haven assets.

Brent crude dipped 20c, or 0.5%, to $43.14 a barrel by 10am GMT, while US West Texas Intermediate (WTI) crude dropped to $41.15 a barrel, down 14c, or 0.4%.

The fall in oil mirrored moves in broader financial markets in Asia amid the concern about escalating tension between the world’s two biggest economies after the closures of consulates in Houston and Chengdu. Global coronavirus cases, meanwhile, exceeded 16-million.

Still, Brent is on track for a fourth consecutive monthly gain in July and WTI is set to rise for a third month as unprecedented supply cuts from Opec and its allies including Russia propped up prices. Output has also fallen in the US.

Oil demand has improved from the deep trough of the second quarter, though the recovery path is uneven as resumption of lockdowns in the US and other parts of the world is capping consumption.

“Oil appears to be caught between opposing forces, crushing price volatility and ranges,” said Oanda senior market analyst for Asia Pacific Jeffrey Halley.

Investors are also watching for any effect from storm Hanna, which battered the Texas coast at the weekend. Oil producers and refiners said on Friday that they did not expect the storm to affect operations.

The rebound in oil prices from lows hit earlier this year has also encouraged the world’s top producers to increase output. The US oil rig count rose last week for the first week since March.

“While we believe rig activity has bottomed, we don’t expect to see a quick recovery any time soon at current price levels,” ING analysts said in a note.

Reuters

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