On Monday morning, oil prices were down by more than 1% on growing fears over the global economic recovery amid a resurgence of coronavirus cases.
A the time of writing, Brent oil futures for November slid by 1.4% to $71.63 per barrel. At the end of the trading session on Friday, the contract lost 0.6%, staying at $72.61 per barrel.
At the same time, WTI oil futures for October fell by 1.4% to $68.34 per barrel. On Friday, the contract closed the session with a decline of 1% to settle at $69.29 per barrel.
By the end of the weekly session, Brent rose by 1.3% while WTI was up by 0.8%.
A weaker than expected US jobs report released on Friday was another factor to push oil prices lower. Thus, the unemployment rate fell to 5.2% in August from 5.4% in July. At the same time, the number of new jobs in the non-agricultural sector increased by only 235,000 (the lowest number in 7 months) whereas the forecast predicted a rise of 750,000.
Judging by the US employment report, the economic recovery is rather patchy. This fact, in turn, could mean slower fuel demand amid new outbreaks of the COVID-19 pandemic.
However, some experts present optimistic outlook for oil in the short term. According to analysts at ANZ, the largest bank in New Zealand, global oil prices may surge in the near future on clear signs of recovery in some Asian countries. Thus, the Chinese authorities are doing everything possible to overcome the next wave of coronavirus as efficiently as possible. Thanks to this, the activity of independent refineries in China - one of the world's largest oil importers - is growing day by day.
One of the main reasons to weigh on oil is the decision of Saudi Arabia, the world's largest exporter of oil, to cut its crude contract prices for Asia. This decision by the Saudis announced this Sunday has caused concerns over the outlook for fuel demand.
On Sunday, state oil giant Saudi Aramco notified customers that it will cut official selling prices in October for all grades sold to Asia.
As a result, the price of Arab Light, Saudi's main oil grade, will decrease by $1.3 per barrel, while the price of other grades will be lower by $1-1.3 per barrel. At the same time, analysts polled by Bloomberg predicted a decline in the cost of Arab Light for buyers in Asia by only $0.6 per barrel.
Traders are still focused on the damage caused by Hurricane Ida which hit Louisiana on August 29. Due to the natural disaster that forced companies operating in the Gulf of Mexico to suspend operation, the number of oil production facilities in the United States decreased by 16 units to 394 units.