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Oil Down Over Increasing U.S. China tensions and COVID-19 Cases

Monday,   27-Jul-2020   08:48 AM (IST)

Oil prices fell on Monday morning in Asia, as the COVID-19 pandemic as well as Sino-U.S. relations  took a turn for the worse over the weekend. Brent oil futures slid 0.37% to $43.62 by 10:37 PM ET (3:37 AM GMT) and WTI futures dropped 0.22% to $41.20. The Brent oil contract rolled over to the Oct 20 contract on Sunday. The U.S. recorded a near record 74,000 new cases of COVID-19 on Friday according to Johns Hopkins University data. More than 1,000 Americans died each day between Tuesday and Friday, the worst death tally since late May. The numbers may lead to further closures and lockdowns and hit at demand for fuel. Also affecting prices is the increasingly tense relationship between the U.S. and China, two of the largest oil consumers in the world. Fears of a full blown diplomatic conflict over the next few months have increased, affecting the value of the dollar and dampening expectations of a sharp increase in demand for fuel. The U.S. and China have both ordered the other shut a consulate in their respective countries, the China’s Houston consulate and the U.S. consulate in Chengdu. U.S. Secretary of State Mike Pompeo called for an end of “engagement,” a policy that has defined U.S.-China relations for nearly five decades.