WTI crude oil is trading bullish at the start of a fresh week over hopes that leading oil producers could tighten supply; however, the gains remain limited amid worries about the impact of the rising number of coronavirus cases on economic recovery and oil demand. At the time of writing, WTI crude oil is trading at around $39.85 per barrel.

Over the previous week, US oil prices had gained around 9% supported by expectations of tighter supply even as the number of oil and natural gas rigs operating registered a decline in the US as well as in Canada. Meanwhile, OPEC members Iraq and Kazakhstan agreed to increase their compliance with the deeper supply cuts agreed on by OPEC+ nations, which should help stabilize oil markets even further.

Crude oil prices have come under pressure over the past few days amid a surge in the number of coronavirus cases across the US, China and other countries worldwide. Traders are concerned that this indicates a possible second wave of the pandemic even as economies reopen and work their way towards recovery, which could force governments to reimpose lockdown measures and cause oil demand to fall as a result.

China has reimposed lockdown restrictions across Beijing last week following a spike in new cases while Australia has also implemented movement restrictions once again in Victoria to contain the spread of infections. A repeat of the lockdown can send oil demand lower and exert downward pressure on crude oil prices in the coming weeks.