Oil extends slide as virus milestone worsens outlook for demand

Oil fell on a negative outlook for demand as global coronavirus fatalities topped half a million and the U.S. recorded a record daily pace of infections.

Futures in New York slid as much as 1.9%, after declining 3.2% last week. U.S. and U.K. public health experts warned against lifting lockdowns too quickly amid a worrying rise in infection rates. Florida, one of the U.S. states reinstating measures to halt the spread, reported a 6.4% increase in infections, while Arizona topped its weekly average for a fourth day.

Output cuts by OPEC and its allies have at least helped to ease concerns about a supply glut. Iraq is reassessing contracts to pump crude at fields where costs are high as it tries to contain expenses while curbing production, the oil minister said on Sunday.

While OPEC+ reductions and a pickup in demand have helped crude climb from its April low, the rally has stuttered this month. Infections continue to soar in many parts of the world, consumption is still a long way off pre-virus levels and many refiners are struggling with low margins.

Crude stockpiles in the U.S. are at record highs, and there’s a risk that U.S. shale producers could start bringing back output. The number of rigs drilling for oil fell by 1 to 188 last week, the lowest since June of 2009.

Chesapeake Energy Corp filed for bankruptcy on Sunday, becoming one of the biggest victims of a spectacular collapse in energy demand from the virus-induced global lockdown. Meanwhile, Exxon Mobil Corp. is preparing to cut jobs to create a slimmed-down, more efficient organizational structure.

Production in Norway is on the up, despite the challenging market, with the giant offshore Johan Sverdrup oil field exporting more than ever before. Crude loadings from the field are set at a record 4.4 million barrels, or 465,000 barrels a day, in August, according to a loading program seen by Bloomberg, compared with 429,000 barrels a day expected in July.

China will raise retail gasoline prices by 120 yuan/ton and diesel prices by 110 yuan/ton starting Monday, the first increase since December 2019.