Covid-19 pandemic weighs on oil prices

9 October 2020 (Last Updated October 9th, 2020 12:23)

Oil prices have slipped at the end of the week due to surge in cases of Covid-19.

Covid-19 pandemic weighs on oil prices
Both Brent and the WTI benchmarks are on track for weekly gains of about 10% this week. Credit: neico from Pixabay.

Oil prices have slipped at the end of the week due to surge in cases of Covid-19.

Brent LCOc1 futures were down by $0.08 to reach $43.26 a barrel, while US West Texas Intermediate (WTI) crude fell $0.05 touching $41.14 a barrel, Reuters reported.

The pandemic concerns overrode the gains made oversupply concerns due to an ongoing strike by Norwegian oil workers.

Compared to last week, both Brent and the WTI benchmarks have made a weekly gain of about 10% this week. The rise in oil prices during this week due to the strike action by Norwegian oil workers.

With Hurricane Delta to strike the Gulf Coast within hours, oil producers in the region have already evacuated offshore facilities and halted nearly 1.5 million barrels per day (Mbpd) of oil output so far.

According to the US Government, the Gulf of Mexico produced 1.65Mbpd in July.

The region accounts for 17% of US crude output. It has been severely hit by several storms over the past few months.

OANDA senior market analyst Edward Moya was quoted by the news agency as stating: “Non-OPEC production is going to take a big hit over the next couple of weeks and this will continue to drive the rebalancing of the oil market.”

The Organization of the Petroleum Exporting Countries (OPEC) secretary-general Mohammad Barkindo hoped that the ‘worst was over’ for the oil industry following a price crash this year due to the novel coronavirus (Covid-19) pandemic.

So far, the global coronavirus death toll is 1,057,102 according to researchers at Johns Hopkins University. Covid-19 infections exceeded 36.2 million worldwide.