Oil prices have edged-down due to concerns over ‘near term fuel demand’ in Europe and the US, which have been hit by a resurgence of new Covid-19 infections.
Brent crude futures fell by $0.44 to reach $41.96 a barrel, while US West Texas Intermediate (WTI) futures were down by $0.55 and stood at $39.74, Reuters reported.
On 9 November, both the Brent and the WTI benchmarks increased 8%. This value marks their ‘biggest daily gains’ seen in five months.
Gains in the previous trading day were supported by an announcement from drug-making companies Pfizer and BioNTech that an experimental Covid-19 treatment was almost 90% effective based on results of the initial trial.
The news agency quoted JP Morgan as stating: “A viable vaccine is unequivocally game-changing for oil, a market where half of demand comes from moving people and things around.
“But as we have written previously, oil is a spot asset that must first clear current supply and demand imbalances before one-to-two-year out prices can rise.”
In addition, investors are awaiting inventory data from industry groups, the American Petroleum Institute (API) and from the US Energy Information Administration (EIA), which are expected to be released today and tomorrow respectively.
Meanwhile, comments made by Saudi Arabia Energy Minister Prince Abdulaziz bin Salman also influenced price drop on 10 November, reported Reuters.
He said that OPEC+ oil output deal could be ‘tweaked’ if demand drops before the availability of the vaccine.
The Organization of the Petroleum Exporting Countries, and allies including Russia, together known as OPEC+, is currently cutting production by about 7.7Mbpd until December to support prices.
The group intends to ramp up output by 2Mbpd from January.
ING economists said in a note: “If the oil market continues to rally between now and the OPEC+ meeting at the end of the month, it could prove self-defeating, as some members may grow more reluctant to roll over current cuts into next year, leaving the market vulnerable over the first quarter of next year.”