The growing coronavirus cases in the United States and Europe are weighing on oil price as it falls over 3% on Wednesday shedding all the gains it made on the previous day. Crude prices are falling amid fears of a supply glut in oil and weaker fuel demand.
European governments have introduced lockdown measures to try to control the spread of the virus.
Although President is a proponent of opening the economy for business, he acknowledged on Tuesday that a coronavirus economic relief deal would likely come after the election, as the differences between the Republicans in the U.S. Senate as well as congressional Democrats are yet to be resolved.
Brent crude is trading at $3.52 per barrel, down 4.08% ($1.68) by 11:46GMT on Wednesday. The U.S oil Western Texas Intermediate (WTI) is trading at $38.00 per barrel down by 4.69% ($1.87). The Western Canadian Select is trading at $27.65 per barrel, down by 6.33% (1.87).
Nigerian Bonny Light closed at $42.16 per barrel on Tuesday.
Brent crude climbed nearly 2% on Tuesday with the U.S. oil gaining 2.6%.
U.S. crude oil and gasoline stocks rose last week, data from industry group the American Petroleum Institute showed, with crude inventories rising by 4.6 million barrels to about 495.2 million barrels, against analysts’ expectations according to Reuters
“The higher-than-expected build in U.S. crude stocks prompted fresh selling, while concerns over supply disruption from Hurricane Zeta have receded,” Reuters quoted Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“Rising COVID-19 cases with the lack of a U.S. coronavirus fiscal relief package also dented investors’ risk appetite,” Kikukawa said. He expected the gloomy sentiment to keep prices under pressure through the Nov. 3 U.S. presidential election.
“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,” said Henning Gloystein, director of global energy & natural resources at Eurasia Group, in a note on Wednesday.
“This will dent fuel consumption and almost certainly force OPEC and its allies to continue withholding oil supply well into 2021,” he said.
Adding to the pressure, Libya’s production should rebound to 1 million bpd in the coming weeks, complicating efforts by other OPEC members and allies to restrict output.
OPEC’s secretary-general Mohammad Barkindo admitted on Monday that any oil market recovery may take longer than hoped due to the latest rise of COVID-19 infections.
The Organization of the Petroleum Exporting Countries and its allies plan to scale back its production in January from a current 7.7 million barrels per day (bpd) to roughly 5.7 million bpd in January to curb the fall in oil price. However, even if the majority in OPEC agree to cut production, Libya’s production cannot be controlled as it is just merging from the war which has hampered its production. According to Reuters, Libyan output now stands at 525,000 barrels daily and could reach 1 million bpd by early next year.
By; Ifunanya Ikueze