Oil prices decline, weighed down by rising Covid-19 cases

Reuters TOKYO | Updated on November 19, 2020

Worries about coronavirus-related economic damage overshadows upbeat news from Pfizer and BioNTech

Oil futures eased on Thursday, surrendering some gains from the previous day as the surge in coronavirus cases and tighter economic restrictions around the globe stoked fears over slower fuel demand, outweighing upbeat vaccine news.

Brent crude futures shed 17 cents, or 0.4 per cent, to $44.17 a barrel by 0345 GMT, after gaining 1.4 per cent on the previous day. US West Texas Intermediate crude declined 29 cents, or 0.7 per cent, to $41.53 a barrel, having risen nearly 1 per cent on Wednesday.

“The spread of coronavirus infection and fresh restrictions in the US and other parts of the world hit market sentiment as it would hamper fuel demand,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

“Investors are also booking profits from the recent rally before the US Thanksgiving holiday later this month,” he said.

The US death toll from Covid-19 surpassed a grim new milestone of 2,50,000 lives lost on Wednesday, as New York City's public school system, the nation's largest, called a halt to in-classroom instruction, citing a jump in coronavirus infection rates.

Daily coronavirus cases in Tokyo and South Korea hit fresh highs, as pollution-cloaked New Delhi struggled with rising cases and Australia reported a highly contagious virus strain which forced a state-wide lockdown.

Worries about coronavirus-related economic damage overshadowed upbeat news from Pfizer and BioNTech that are seeking US and European authorisation for their Covid-19 vaccines next month.

“Weaker global equities amid growing worries over the surging pandemic also bolstered fears over slowing consumption and fuel demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Asian shares eased from all-time highs on Thursday as widening Covid-19 restrictions in the US weighed on Wall Street.

Boosting worries about oversupply, Libya's National Oil Corporation (NOC) and France's Total discussed NOC's efforts to raise capacity and increase production rates to the highest levels.

Supporting prices, US crude inventories rose 768,000 barrels last week, less than analyst expectations in a Reuters poll for a 1.7 million-barrel rise, government data showed. Distillate stockpiles, which include diesel and heating oil, fell by 5.2 million barrels, far exceeding expectations.

“Still, lingering worries over a global supply glut, especially with the Covid-19 -hit economies, will likely limit the upside of oil prices,” Fujitomi's Saito said, predicting WTI to be traded between $40 and $42 a barrel until the OPEC+ meeting later this month.

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OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, is due to discuss policy at a full ministerial meeting to be held on November 30 and December 1.

Members of OPEC+ are leaning towards delaying the current plan to boost output in January by 2 million barrels per day (bpd), sources have said.

Published on November 19, 2020

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