UPDATE 12-Oil falls on fears of second coronavirus wave

* Traders concerned about possible second wave of virus
infection
* Saudi Arabia to reduce June oil output by an extra 1 mln
bpd
* U.S. drillers cut oil and gas rigs to historic low -Baker
Hughes

(Updates with settlement prices, adds commentary)
By Stephanie Kelly
NEW YORK, May 11 (Reuters) - Oil prices fell on Monday as
investors worried about a second wave of coronavirus infections,
but new output cuts from Saudi Arabia tempered worries about
oversupply and limited price losses.
Brent crude futures LCOc1 lost $1.37, or 4.4%, to settle
at $29.60 a barrel. U.S. West Texas Intermediate (WTI) crude
CLc1 fell 60 cents, or 2.4%, to settle at $24.14 a barrel.
Global oil demand has slumped by about 30% as the
coronavirus pandemic has curtailed movement across the world,
leading to growing inventories globally. While crude futures
have fallen more than 55% this year because of the virus, prices
have gained the past two weeks, supported by a modest rebound in
demand as some travel restrictions are eased.
However, fears about a second wave of the virus weighed on
futures.
Germany reported on Monday that new coronavirus infections
were accelerating exponentially after early steps to ease its
lockdown. Elsewhere, Wuhan, the epicentre of the outbreak in
China, reported its first cluster of infections since the city's
lockdown was lifted a month ago. South Korea also warned of a second wave of the virus on
Sunday. Prices received a boost earlier in the session after a Saudi
energy ministry official said the ministry has directed national
oil company Saudi Aramco (SE:2222) to reduce its crude production for June
by an extra 1 million barrels per day. "The major positive outcome of these additional cuts is
that, according to our calculations, we will now probably avoid
global storage tank tops if demand ramps up as expected and new
lock-down measures are not imposed," said Rystad Energy's senior
oil markets analyst Paola Rodriguez Masiu.
The reduction is on top of a pact by the Organization of the
Petroleum Exporting Countries (OPEC) and allied producers - a
group known as OPEC+ - to cut production from May 1 by about 10
million bpd in an effort to support prices.
"It's a balance between OPEC production cuts versus concerns
about the possibility of a second wave of coronavirus," said
Phil Flynn, senior analyst at Price Futures Group.
The Kazakh government signed a decree to cut oil output from
May onwards in line with a deal agreed last month by the OPEC+
producer group, four sources familiar with the matter told
Reuters. In the United States, fears that the country is running out
of oil storage space sent WTI prices into negative territory
last month, prompting some U.S. producers to rein in output.
The number of operating oil and gas rigs in the world's
largest oil producer last week fell to 374, a record low
according to data going back to 1940 from energy services
company Baker Hughes Co BKR.N .

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Graphic: Turning off the taps https://tmsnrt.rs/3cjZEyp
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