Oil prices have slipped by 4% due to worries that expanded Covid-19 lockdowns in Europe would weaken fuel demand.
The price drop is also due to concerns about ‘turbulence’ over the US presidential election this week.
Brent crude futures were down by $1.49to $36.45 a barrel while US West Texas Intermediate (WTI) futures fell by $1.58 touching $34.21, Reuters reported.
The European nations have reimplemented lockdown measures to try to limit the spread of infection rates, which have seen a surge in the last month.
Global oil trading firms expect further demand destruction.
According to Reuters, energy and commodities trader Vitol ‘sees winter demand at 96Mbpd’, while multinational commodity trading company Trafigura ‘expects demand to fall to 92Mbpd’ or below.
CMC Markets Sydney chief market strategist Michael McCarthy was quoted by the news agency as stating: “A lot of traders are now looking at the US and their rising infection rates and wondering if Europe is providing the model for what will happen in the US in the coming weeks.”
Furthermore, worries about ‘weakening demand’ and rising supplies from the US and the Organization of the Petroleum Exporting Countries (OPEC) members caused oil prices to drop for a second straight month last month.
OPEC, and its allies, including Russia, together known as OPEC+, is cutting production by 7.7Mbpd to support prices.
A policy meeting is expected to be scheduled by the OPEC+ over 30 November and 1 December.
According to some analysts, OPEC+ plans to enhance output by 2Mbpd from January next year.
A tighter race in the way to the US election on 3 November, as well as ‘electoral uncertainty, which prompted investor caution in global markets’.
McCarthy added: “The most immediate concern for markets is that political paralysis will delay or diminish a fiscal response to the deteriorating coronavirus situation.”