Oil prices dip as coronavirus infections rise

Oil prices dipped on Tuesday on jitters that a rise in coronavirus infections around the world could hurt fuel demand, but hopes that production cuts could be extended kept declines in check.

Brent crude was down 14 cents, or 0.4 percent, at 39.58 U.S. dollars a barrel at 00:27 GMT, having gained 2.6 percent on Monday. U.S. oil fell 24 cents, or 0.7 percent, to 36.88 U.S. dollars a barrel, after closing 2.4 percent higher in the previous session.

Coronavirus cases rose to more than eight million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks.

"Renewed optimism that OPEC+ production cuts could remain in place if we see second wave concerns intensify have oil prices refusing to enter free fall," said Edward Moya, senior market analyst at OANDA.

Oil prices rose on Monday after the United Arab Emirates' energy minister expressed confidence that OPEC+ producers that have not been in full compliance with agreed cuts would up their game. He also said there were signs that oil demand was increasing as countries eased lockdowns in some parts of the world.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping known as OPEC+, agreed this month to extend production cuts of 9.7 million barrels per day through July.

They also called on members that have not been complying to make up their commitments with extra cuts later.

U.S. shale producers are also cutting back on drilling amid the collapse in demand for oil.

Production from seven major U.S. shale formations is likely to drop to close to a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.

U.S. drillers have slashed production and the number of oil rigs fell below 200 last week, the lowest since June 2009, according to energy services company Baker Hughes Co.