Oil falls as European blockages lower hopes for recovery By Reuters

TOKYO (Reuters) – Oil prices fell again on Monday, falling about 1%, with concerns about a drop in demand for fuel products in the wake of even more European blockages dominating trade.

fell 60 cents, or 0.9%, to $ 63.93 a barrel at 0136 GMT. US oil fell 68 cents, or 1.1%, to $ 60.74 a barrel. Both contracts were down more than 6% last week.

Germany plans to extend a blockade to contain COVID-19 infections in a fifth month, according to a draft proposal, after new cases exceed levels that authorities say will cause hospitals to be overburdened.

“The reality is that we are still a long way from a full recovery in demand, and it is the record levels of withdrawn production capacity that are the main support for the oil market,” said Stephen Innes, Axi’s chief global market strategist .

The Organization of Petroleum Exporting Countries and its allies have put in place unprecedented cuts in production in a pact to balance global markets after demand plummeted during the COVID-19 pandemic.

US drillers are starting to take advantage of an earlier price hike with optimism about the return on demand, adding the largest number of oil drilling rigs since January in the week through Friday.

The oil and gas drilling rig’s count, an early indicator of future production, rose from nine to 411 last week, the highest since April, energy services company Baker Hughes Co said in its Friday report.

The platform count has increased in the past seven months and almost 70% from a record low of 244 in August.