Oil prices have slipped by 2% due to a surge in the US crude inventories and growing cases of Covid-19 infections in the US and Europe.
Brent crude futures dropped by $0.74 or 1.8% to $40.46 a barrel while US West Texas Intermediate (WTI) fell by $0.90 to $38.67, Reuters reported.
Data released by the industry group American Petroleum Institute (API) reported a rise in the US crude inventories by 4.6 million barrels to 495.2 million barrels in the week ending 23 October.
Nissan Securities research general manager Hiroyuki Kikukawa was quoted by the news agency as stating: “The higher-than-expected build in US crude stocks prompted fresh selling, while concerns over supply disruption from Hurricane Zeta have receded.”
On 27 October, energy companies and ports along the US Gulf Coast prepared for storm Zeta as it approached the Gulf of Mexico.
Zeta is reportedly the 11th hurricane of the season.
Kikukawa added: “Rising Covid-19 cases with the lack of a US coronavirus fiscal relief package also dented investors’ risk appetite.”
Global coronavirus infections have passed 43.5 million. The global coronavirus death toll is 1,159,708, according to researchers at Johns Hopkins University.
The US, Russia, France and other countries have recently registered record highs of infections.
The European governments have started implementing new measures ‘to try to rein in the fast-growing outbreaks’.
Meanwhile, US President Donald Trump confirmed that a Covid-19 economic relief aid ‘would likely come after the election’.
Eurasia Group global energy and natural resources director Henning Gloystein said: “With and without another lockdown, movement across Europe and North America will fall during the coming winter months as most people avoid travel and big gatherings.
“This will dent fuel consumption and almost certainly force OPEC and its allies to continue withholding oil supply well into 2021.”
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 2021 after reducing output by a record amount earlier this year.