Oil prices fall as rising COVID cases in China reignite fuel demand concerns

Oil prices fell $1 in early trade in Asia on Monday, erasing Friday's gains, as attention reverted to rising COVID-19 cases in China and the likelihood of gasoline consumption restrictions in the world's top oil importer.

Futures for August delivery of U.S. West Texas Intermediate (WTI) oil declined $1.54, or 1.6%, to $96.05 a barrel at 00:55 GMT on Saturday, after gaining $1.91 on Friday.

Brent oil futures for September delivery fell $1.47, or 1.5 percent, to $99.69 a barrel, paring Friday's gain of 2.1%.

China, the second-largest oil consumer in the world, reported 691 new COVID cases on Saturday, up from 547 the previous day, and the highest number of locally transmitted cases since May 23.

"Oil opens the week lower as the market digests the demand impact of the increase in new COVID cases in China and as the market cautiously awaits the monumental event risk of whether Nord Stream 1 gas flow from Russia to Europe will resume later this week," said Stephen Innes, chief executive officer of SPI Asset Management.

The largest system carrying Russian natural gas to Germany, the Nord Stream 1 pipeline, commenced 10 days of annual maintenance on July 11. Due to the war in Ukraine, governments, markets, and companies are afraid that the shutdown might be prolonged.

This gas loss would have a devastating impact on Germany, the fourth-largest economy in the world, and raise the possibility of a recession.

As predicted, Vice President Joe Biden's trip to Saudi Arabia generated no pledge to raise oil output from the biggest OPEC producer. Prior to Biden's meeting with Saudi Crown Prince Mohammed bin Salman, this belief in an impending oil scarcity led to last Friday's price increase.

Biden wants Gulf oil firms to raise output in an effort to lower oil prices and inflation.

Amos Hochstein, a senior counselor for energy security at the U.S. State Department, indicated on CBS' Face the Nation on Sunday that the trip will result in oil producers taking "a few more steps" in terms of supply, but he did not identify which nation(s) will raise output.

As their current output agreement expires in September, the August 3 meeting of the Organization of Petroleum Exporting Countries (OPEC) and its partners, including Russia, known collectively as OPEC+ will be closely watched.