Oil prices have slipped due to concerns that the recovery of the world’s biggest economy, the US, is slowing as the Covid-19 outbreak continues.
The price drop is also due to a renewed wave of Covid-19 infections in Europe. This led to reimposed travel restrictions across many countries.
Brent crude LCOc1 futures edged lower by $0.34, or 0.8%, to reach at $41.43 a barrel while US West Texas Intermediate crude futures were down by $0.37, or 0.9%, to touch $39.56 a barrel, Reuters reported.
The fears over fuel demand and economic outlook as a result of the Covid-19 resurgence gave rise to a rally in the dollar as lenders turned over investment in safer assets. This added more pressure to fuel prices.
Oil prices edged down after data released by the US Federal Reserve officials showed a ‘slowed’ US business activity in September.
This raised concerns over a ‘stalling’ recovery as the UK and Germany also imposed restrictions to curb the spread of the virus.
All these factors affected the outlook of the fuel demand.
OANDA senior market analyst Jeffrey Halley was quoted by the news agency as saying: “Oil prices are wilting as product for immediate delivery remains plentiful.
“Consumption outlook concerns are rising as Covid-19 restrictions return in Europe, and the clamour from the Federal Reserve for more US fiscal stimulus, undermines the global recovery case, the lynchpin for oil’s price recovery.”
Meanwhile, the market on the supply front remains cautious of a resumption of Libyan exports.
However, it is still unclear how quickly the resumption in production could increase volumes.
Commonwealth Bank commodities analyst Vivek Dhar said: “That clearly is going to be something the oil market doesn’t need right now.”