Brent crude futures LCOc1 were down 51 cents, or 1.7%, at $30.46 a barrel by 0624 GMT, while U.S. West Texas Intermediate crude futures CLc1 fell 49 cents, or 2.0%, to $24.25 a barrel.

Both benchmarks have notched up gains over the past two weeks as countries have eased business and social lockdowns imposed to cope with the coronavirus and fuel demand has rebounded modestly. Oil production worldwide is also declining.

But possible signs of a second wave of coronavirus infections in northeast China and South Korea worried investors even as more countries started to pivot towards easing pandemic restrictions in moves that could support oil demand.

“That’s definitely a cause for concern as the last thing people want is for lockdowns to happen again across multiple cities, but I think authorities should be much more prepared right now to cope with a second wave,” said OCBC economist Howie Lee in Singapore.

“Overall, the risk environment looks quite conducive for further upside,” he said, adding that Brent could stay supported at $30 a barrel.

Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world, building up inventories globally.

Fears that the United States is running out of storage space triggered a crash by WTI prices into negative territory last month, prompting some U.S. producers to slash output.

The number of operating oil and gas rigs in the world’s largest oil producer fell to 374 in the week to May 8, a record low according to data released on Friday from energy services firm Baker Hughes Co (BKR.N) going back to 1940.

“People are surprised by how quickly the U.S. is shutting in production and that’s exactly what we need in order to support prices,” said Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.

“There’s another 10 days before the June contract expires ... if the WTI contract can avoid a crash going into expiry, hopefully we’ve seen the bottom.”

Reuters

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