Experts believe that oil prices are about to fall again as the second wave of the coronavirus is coming. A new COVID-19 outbreak has been reported in the Chinese capital. As a result, schools, shopping centers, supermarkets, and sports facilities have been closed again. A record 26,000 new cases of coronavirus infection were confirmed in the United States almost within a month. Most new cases are registered in the south of the country. This situation creates new threats to the world economy.
Thus, oil prices have been affected by the current situation. Since the beginning of the week, crude prices have lost more than 10% of their recent gains.
The International Monetary Fund assumes that the global economic growth will slow down even further. For example, industrial production in China increased by 4.4% in May falling short of analysts' expectations. The market situation reveals the weakness of the global economy. According to Robert Kaplan, the President of Dallas Federal Reserve Bank, economic recovery will mostly depend on people and their observance of security measures.
However, the coronavirus is still not defeated, while oil reserves are constantly increasing. It is estimated that China's oil inventories will grow by 440 million barrels in the first half of 2020 reaching an all-time record. Thanks to this growth, oil prices were able to recover, but it is not clear how long this would last.
Commerzbank experts believe that current situation in the market was caused by late response to coronavirus. COVID-19 has not disappeared and continues to spread throughout the planet. However, the market reacted only to good news, such as a reduction in shale oil production in the United States. Analysts have warned that oil prices could fall again due to weak global demand for fuel.
