(Bloomberg) -- Oil extended last week’s decline with signs of a fresh coronavirus outbreak in China adding to concerns about an escalation in the U.S.
Futures in New York fell as much as 1.9%. Beijing closed the city’s largest fruit and vegetable supply center and locked down nearby housing districts after dozens of people associated with the wholesale market tested positive for the virus. Meanwhile, cases in the U.S. continue to rise, with a former top health official saying that new outbreaks are now occurring.
Crude’s six-week rally came to an abrupt halt last week. The Federal Reserve’s warning that the pandemic could inflict prolonged damage on the U.S. economy combined with fears over a second wave of virus infections to drive an 8.3% decline.
The number of active drilling rigs in the Permian Basin of West Texas and New Mexico fell by 4 to 137 last week, just 3 above a record low in 2016, according to Baker Hughes Co. data released on Friday. That marked the 13th straight week of declines as explorers pare activity in response to the coronavirus-driven demand slump.
Fresh from its decision to extend record supply curbs but with prices on the slide, officials from OPEC and its allies will review the state of the market this week. The producer bloc’s technical committee is due to hold an online meeting on Wednesday. There are assessments too from the International Energy Agency as well as BP (NYSE:BP) Plc’s annual review.
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The oil market has already seen the fastest improvement in demand and steepest drop in supply, according to Barclays (LON:BARC), suggesting the price recovery might slow.
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