Oil derrick pumps operate at Inglewood Oil Field in Culver City, California on Sunday, July 11, 2021.

Kyle Grillot | Bloomberg | Getty Images

Oil prices plummeted on Monday, building on last week’s heavy losses as rising Covid cases raised fears of a slowdown in demand.

West Texas Intermediate crude oil futures were down 2.5% to trade at $ 66.60 a barrel. The contract traded as low as $ 65.15 during the session. The international Brent crude oil benchmark fell 2.2% to $ 69.15 per barrel.

“The biggest challenge for the oil markets remains the uncertainty surrounding COVID, as the ‘Delta variant’ has led to the highest daily case numbers since early 2021,” said Bank of America.

Last week, both contracts fell more than 7% for their worst week since October. The decline came amid demand concerns and a surprising surge in US crude oil inventories. The US Energy Information Administration said on Wednesday that crude oil inventories had increased by 3.6 million barrels in the previous week, while the analysts polled by FactSet were expecting a draw of 2.9 million barrels. However, gasoline stocks fell more than expected by 5.3 million barrels.

Data from China also weighed on crude oil on Monday. The country’s export growth slowed unexpectedly in July, while imports rose 28.1% year over year. This was below projections that called for a 33% increase.

China, the world’s second largest oil consumer, imported 9.7 million barrels a day in July, below 10 million bpd for the fourth consecutive month, according to analysts at Commerzbank.

“The price slide continues [Monday] amid growing concerns about demand, “the company wrote in a statement to customers.” Market participants are watching the rising coronavirus numbers in Asia with considerable concern as it will force the Chinese government to take drastic measures in line with its strict zero-covid ” could initiate strategy. “

A possible slowdown in demand as portions of global lockdown measures re-introduce after a production spurt earlier this month by OPEC and its allies. In April 2020, the group implemented record production cuts of nearly 10 million bpd as the pandemic weakened demand for petroleum products.

Oil has slowly recovered and WTI is still up 40% for 2020. In July, the contract traded as low as $ 76.98, a price that has not been seen since 2014.

“The oil market is likely to stay in a range here as the physical market will be in deficit by the end of the year,” said Tom Essaye, editor of the Sevens Report.

– CNBC’s Michael Bloom contributed to the coverage.

Did you like this article?
For exclusive stock selection, investment ideas and global CNBC livestream
Sign up for CNBC Pro
Start your free trial now