LONDON: Oil prices were dragged sharply lower on Friday by weak US fuel demand, fears of a second wave of coronavirus cases in South Korea and a worsening in US-China relations, but were still on track for a hefty monthly gain.
July Brent crude fell 72 cents, or 2 percent, to $34.57 a barrel by midday in London. US West Texas Intermediate (WTI) crude was down 83 cents, or 2.5 percent, at $32.88.
Still, WTI made a record monthly gain of 75 percent in May, with Brent up by about 37 percent, its strongest monthly rise since March 1999.
“The global reaction to China’s move to propose new security laws for Hong Kong continues to increase, while there’s a score of new COVID-19 cases in South Korea,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugend.
Thursday’s data from the Energy Information Administration showed that US crude oil and distillate inventories rose sharply last week.
Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.
Looking ahead, traders will be watching the outcome of talks on output cuts between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, in the second week of June.
Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.