WTI fails to hold on to early gains, looks to settle in red near $25

• Crude oil prices rose after Saudi Arabia announced additional oil output cuts.
• UAE also contributed in rebalancing of oil market by further lowering its production.
• Investors remain on edge on possibility of a second coronavirus wave.

Crude oil prices staged a technical correction and edged lower during the first half of the day following last week's impressive rally. The barrel of West Texas Intermediate (WTI) tested the $25 handle during the European trading hours but gained traction after OPEC+ producers announced additional output cuts.

Oil prices struggle to capitalize on falling supply

Saudi Arabia's energy ministry said that it has directed Saudi Aramco to lower the oil output by an additional one million barrels per day (bpd). Moreover, the United Arab Emirates and Kuwait followed suit by cutting their productions by 100,000 and 80,000 bpd, respectively, to balance the oil market. 

Although the WTI advanced to a daily high of $26.70 on these developments, it reversed its direction and was last seen down 3.9% on the day at $25.05. 

Heightened concerns over the possibility of a second coronavirus wave seem to be causing investors to remain sceptical about a protracted demand recovery. The Chinese city of Wuhan on Monday reported new COVID-19 cases for the first time since coming out of lockdown a month ago. Additionally, Germany acknowledged that the number of confirmed infections started to rise at a fast pace since easing restrictions.