Despite the efforts of the OPEC+ coalition to keep the supply under control, the United States continues piling up crude inventories, increasing by 1.4 million barrels on the week ending June 19.
This week, the oil markets remained in the negative territory, as fears for a second wave of the coronavirus surged given the increase of cases in certain places.
The West Texas Intermediate Crude oil futures dropped 1.64 percent during Sunday's session, closing at the 37.86 level. Conversely, the Brent oil futures went down by 1.51 percent, closing at the 40.40 level.
The coronavirus outbreak continues advancing around the world, with 10,250,322 infected individuals and a death toll of 504,498. The United States continues being the most affected country in the world, with 2,637,077 confirmed infections as well as a death toll of 128,437, followed by Brazil and Russia.
New coronavirus outbreaks are being reported in countries like New Zealand and Australia, as rumors regarding a new lockdown spread. In the United States, some states like Texas, Florida, and California are also reporting a spike in new cases.
This could affect the demand for crude oil in the near future, which is one of the main reasons there are fears in the markets since its pushing the governments to implement partial lockdowns.
Another reason is that the supply side is also having trouble. Despite the efforts of the OPEC+ coalition to keep the supply under control, the United States continues piling up crude inventories, increasing by 1.4 million barrels on the week ending June 19.
The markets also learned recently that Saudi exports of oil to the United States are dropping significantly. According to Bloomberg, only one Saudi cargo reached the United States in the first two weeks of June, which contrasts with the fact that a couple of months ago the Saudis were flooding the American markets with oil.
"The supply picture towards the end of July will be significantly different from the present oversupply," explained an analyst at Forex.com.
The US stock markets closed last week in the negative territory. The Dow Jones Industrial Average dropped 2.84 percent on Friday's session, closing the week at the 25,015.55. The S&P 500 went down by 2.42 percent, closing at 3,009.05, while the Nasdaq 100 dropped 2.50 percent, closing the last session of the week at 9,849.36.
he geopolitical situation is getting complicated as well. On one hand, the UK and the European Union continued signaling their disagreements last week, which increased fears for seeing the UK leaving the EU with no deal at the end of the transition period. Brexit talks are set to resume on Monday, which would be the first round of face-to-face talks since March.