Oil prices slip due to resurgence in Covid-19 cases

16 October 2020 (Last Updated October 16th, 2020 11:27)

Oil prices have edged down due to concerns that a surge in the Covid-19 cases in Europe and the US is reducing fuel demand.

Oil prices slip due to resurgence in Covid-19 cases
OPEC+ is set to reduce its current oil supply cuts of 7.7 Mbpd by 2 Mbpd in January next year. Credit: James Armbruster / Pixabay.

Oil prices have edged down due to concerns that a surge in the Covid-19 cases in Europe and the US is reducing fuel demand.

The price drop is also due to a stronger US currency.

Brent crude futures for December were down $0.44 or 1.0% to $42.72 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.40 or 1.0%, touching $40.56, Reuters reported.

Fujitomi chief analyst Kazuhiko Saito said: “Worries over weakening fuel demand in Europe due to a resurgence in Covid-19 cases and a higher US dollar against the euro weighed on investor sentiment.”

Some of the European nations are re-imposing lockdowns due to a surge in new Covid-19 cases.

Cases of Covid-19 infections have increased in and around the US Midwest with new infections and hospitalisations rising to record highs as temperatures reach lower due to cold weather.

On 16 October, the US dollar headed towards weekly gains as surging cases of Covid-19 stalls economic recovery.

Meanwhile, Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, expressed concerns about a weaker demand outlook due to the second wave of coronavirus infections in a meeting on 16 October.

Nissan Securities research general manager Hiroyuki Kikukawa said: “All eyes are on OPEC+ move from January.”

OPEC+ is now set to reduce its current oil supply cuts of 7.7 Mbpd by 2 Mbpd in January next year.

OPEC Secretary-General Mohammed Barkindo said: “We have to be realistic that this recovery is not picking up pace at the rate that we expected earlier in the year.

“Demand itself is still looking anaemic.”