Oil prices drop due to fuel demand concerns as Covid-19 cases rise

14 October 2020 (Last Updated October 14th, 2020 11:34)

Oil prices have edged down due to fuel demand concerns and the increase in Covid-19 cases across Europe and the US.

Oil prices drop due to fuel demand concerns as Covid-19 cases rise
In its monthly report, OPEC said that 2021 oil demand will rise by 6.54 Mbpd to 96.84 Mbpd. Credit: gloriaurban4 / Pixabay.

Oil prices have edged down due to fuel demand concerns and the increase in Covid-19 cases across Europe and the US.

Brent crude futures for December were down $0.17 or 0.4% to $42.28 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.18 or 0.5%, touching $40.02, Reuters reported.

On 13 October, in its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) said that 2021 oil demand will rise by 6.54 Mbpd to 96.84 Mbpd.

The new estimate is 80,000 bpd lower than its forecast a month ago. The decline in the new estimate is due to the economic disruptions caused as a result of the Covid-19 pandemic.

OANDA senior market analyst Edward Moya said: “Oil prices are steady in Asia as the dollar rally takes a break and as the Russian and Saudis show a united front in making OPEC+ oil producers live up to their pledged output cut promises.

“Crude prices are looking very vulnerable as the coronavirus continues to spread like wildfire across Europe and trending higher in the US.”

Meanwhile on the supply front, the US Gulf of Mexico crude oil production continued to recover just four days after Hurricane Delta storm made its impact.

In the US, Hurricane Delta dealt the ‘greatest blow’ to the Gulf of Mexico energy production in 15 years. It was downgraded to a post-tropical cyclone by 11 October.

According to a preliminary Reuters poll, the US crude stocks likely fell last week while distillate stockpiles were seen falling for the fourth week.