Oil slips amid Covid resurgence and US election uncertainty

6 November 2020 (Last Updated November 6th, 2020 11:48)

Oil prices have edged-down by 1% as the second wave of Covid-19 has sent much of Europe back into lockdown and uncertainty over US election result persists.

Oil slips amid Covid resurgence and US election uncertainty
On 5 November, President Donald Trump said he would win the US election ‘if legal votes were counted’, providing no evidence for his claim. Credit: John R Perry from Pixabay.

Oil prices have edged-down by 1% as the second wave of Covid-19 has sent much of Europe back into lockdown and uncertainty over US election result persists.

Brent crude futures were down by $0.48 to $40.45 a barrel, while US West Texas Intermediate (WTI) futures fell by $0.52 to $38.27, Reuters reported.

On 5 November, Italy recorded its daily highest number of Covid-19 cases. Infections also increased by at least 120,276 in the US.

OANDA senior market analyst Jeffrey Halley was quoted by the news agency as saying: “Covid-19’s rampage across Europe and the US is likely to deliver a hit to consumption.

“With no concrete evidence that OPEC+ is moving to slow or reverse the pace of production increases, the supply/demand imbalance has capped oil’s pre-election rally.”

The European Union’s executive commission lowered its economic forecast and said the economy wouldn’t reach pre-pandemic levels until 2023.

On 5 November, President Donald Trump left markets uncertain by saying he would win the US election ‘if legal votes were counted’ but provided no evidence for his claim.

Axi chief global market strategist Stephen Innes stated: “The most critical questions for oil are how quickly a Covid-19 vaccine is widely available, whether a US stimulus deal can be achieved in a fractious and uncertain political environment, and how OPEC will respond to demand concerns.”

The Organization of the Petroleum Exporting Countries, and allies including Russia, together known as OPEC+, is currently cutting production by about 7.7Mbpd to support prices.

The group intends to ramp up output by 2Mbpd from January next year.

Meanwhile, data released by the US Energy Information Administration (EIA) showed a fall in the US crude stocks by about eight million barrels in the week ending 30 October.

The decline was attributed to the halt of production in the Gulf of Mexico as another hurricane passed through the region.