Oil prices slip due to renewed Covid-19 lockdowns

29 October 2020 (Last Updated October 29th, 2020 10:53)

Oil prices have slipped as governments of many nations renewed restrictions to limit the spread of a second wave of Covid-19 infections.

Oil prices slip due to renewed Covid-19 lockdowns
Data released by the US Energy Information Administration (EIA) showed a rise in the US crude stockpiles by 4.3 million barrels in the week to 23 October. Credit: 15299 from Pixabay.

Oil prices have slipped, as governments of many nations renewed restrictions to limit the spread of a second wave of Covid-19 infections.

The price drop is also due to growing global oil supply glut.

Brent crude futures were down by $0.12 or 0.31% to $39.00a barrel while US West Texas Intermediate (WTI) fell by $0.21 touching $37.31, Reuters reported.

French President Emmanuel Macron ordered the country back into lockdown on Wednesday, as a large-scale second wave of infections threatened to overwhelm Europe before the winter.

Germany will shut bars, restaurants and theatres from 2 to 30 November under measures agreed between Merkel and heads of regional governments.

DailyFX strategist Margaret Yang was quoted by the news agency as stating: “The demand outlook is deteriorating as a second viral wave swept the US and most part of Europe.

“Stricter social distancing measures and more lockdowns may bring a larger-than-expected impact on global energy demand.”

Organization of the Petroleum Exporting Countries (OPEC), and its allies, including Russia, together known as OPEC+, is set to increase output by 2Mbpd in January next year after reducing output by a record amount earlier this year.

ANZ Research said in a note: “The pandemic’s resurgence is putting pressure on OPEC to delay its planned production hike in January.”

Data released by the US Energy Information Administration (EIA) showed a rise in the US crude stockpiles by 4.3 million barrels in the week to 23 October.

Meanwhile, Hurricane Zeta is estimated to weaken into a non-tropical gale-force low by the morning of 29 October in the US.