Oil falls on fresh lockdowns, US poll uncertainty
Oil prices fell on Monday on worries that widening coronavirus lockdowns in Europe would weaken fuel demand while concerns remain over potential turbulence resulting from this week’s US presidential election.
Brent crude was down 13 cents, or 0.3%, to $37.81 a barrel by 1443 GMT and US West Texas Intermediate fell 16 cents, or 0.4%, to $35.63. Both contracts fell more than $2 earlier in the session.
Countries across Europe have reimposed lockdown measures to try to slow Covid-19 infection rates that have accelerated in the past month.
“The number of lockdowns - and the oil demand the countries that imposed them account for - will lead to some demand destruction, depressing balances and putting further strain on the already fragile market,” said Rystad Energy analyst Paola Rodriguez-Masiu.
Global oil trading companies expect further demand destruction, although estimates differ. Vitol sees winter demand at 96 million barrels per day (bpd) while Trafigura expects demand to fall to 92 million bpd or below. A tighter race in the lead up to the US election on Tuesday and electoral uncertainty also prompted investor caution in global markets.
“The concerns over oil supply and demand fundamentals ... are going to play second fiddle to the US presidential election and to how risk markets will react to the outcome,” BNP Paribas analyst Harry Tchilinguirian said.
Oil pared some losses after Japan’s export orders grew for the first time in two years and China’s factory activity rose to a near-decade high in October. More manufacturing surveys are expected from the euro zone and the United States later in the day.
Sharply rising Libyan production also added to pressure on prices. Libya’s output currently stands at around 800,000 barrels per day (bpd), 100,000 more than a few days ago, a Libyan source told Reuters on Saturday.
Meanwhile, Organisation of the Petroleum Exporting Countries (OPEC) oil output rose for a fourth month in October, a Reuters’ survey found.
Published in The Express Tribune, November 3rd, 2020.
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