Rising COVID Cases and U.S-China tensions continue to push investors away from oil

Oil prices edged down on Monday as rising coronavirus cases and tensions between the United States and China pushed investors toward safe-haven assets such as Gold and Bitcoin.

Brent crude dipped 10 cents, or 0.2%, to $43.24 a barrel by 0041 GMT while U.S. West Texas Intermediate (WTI) crude was at $41.24 a barrel, down 5 cents.

The decline in oil prices mirrored moves in broader financial markets in Asia amid concerns about mounting tensions between the world’s two biggest economies following the closure of embassies in Houston and Chengdu. Global coronavirus cases, meanwhile, exceeded 16 million.

However, Brent is on course for a fourth straight monthly gain in July while WTI is poised to rise for a third month as unprecedented supply cuts from the Organization of the Petroleum Countries and its allies including Russia, as well as in the United States, propped up prices.

Oil demand has steadily improved from the deep trough seen in the second quarter, supporting prices, although the recovery path is uneven as the resumption of lockdowns in the United States and other parts of the world is capping consumption.

Investors are also watching for any impact from storm Hanna which battered the Texas coast over the weekend, threatening heavy rains in Texas and Mexico. Oil and gas producers and refiners said on Friday that they did not expect the storm to affect operations.

The rebound in oil prices has also encouraged the world’s top producers to increase output and exports again.

The U.S. oil rig count rose last week for the first week since March after producers added one rig, Baker Hughes data showed a sign that U.S. oil production decline may have bottomed out.

The world’s top exporter Saudi Arabia again topped the chart of crude suppliers to China in June, supplying 2.16 million barrels per day, or nearly 17% of China’s record imports that month.

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