Singapore — 0248 GMT: Crude oil futures were lower in mid-morning trade in Asia Aug. 3 as weakening demand and rising supply weighed on market sentiment.
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At 10:48 am Singapore time (0248 GMT), the new front-month ICE Brent October crude futures fell 26 cents/b (0.6%) from the July 31 settle at $43.26/b, while NYMEX September light sweet crude contract was down by 30 cents/b (0.74%) at $39.97/b.
The unabated COVID-19 spread and rising fatalities worldwide continue to be the most significant issue capping oil demand recovery. The global case count stands at 17.97 million, with total deaths at 687,067, according to the latest data from John Hopkins University.
The US' gross domestic product fell by a record 32.9% in the second-quarter, while the number of Americans filing for initial unemployment benefits increased for the second consecutive week to 1.43 million, according to government data released on July 30, indicating that economic recovery may be flat lining.
In Australia, the government of Victoria declared a state of disaster on Aug. 2 and imposed a nightly curfew from 8 pm to 5 am for the capital, Melbourne, as high levels of COVID-19 infections continue, according to media reports.
On the supply front, concerns are rising that a rebound in global production as OPEC+ pulls back from unprecedented production cuts in August and returning US production will further weaken supply-demand fundamentals.
OPEC+ agreed to end its record production cut of 9.7 million b/d as scheduled after a Joint Ministerial Monitoring Committee meeting on July 15 and ease into a lower 7.7 million b/d production cut in August. However, compensation cuts of roughly 840, 000 b/d indicates that only about 1.1 million b/d of production will return.
"The balance between positive longer-term sentiment and near-term negatives, [mainly] increasing coronavirus infections, rising OPEC+ and US onshore production, has kept oil in a relatively tight range in recent weeks and on an upward trend for three consecutive months," Stephen Innes, chief global markets analyst at AxiCorp, said in a note Aug. 3.
"Still, I think positive sentiment could be tested in August as growing near-term pressure on the supply side becomes harder to ignore," he added.