US Markets

Oil slides on COVID-19 resurgence, strong dollar

Credit: REUTERS/ESSAM AL-SUDANI

Oil prices slid on Friday dragged down by concerns that a spike in COVID-19 cases in Europe and the United States is curtailing demand in two of the world's biggest fuel consuming regions, while a stronger U.S. dollar also added to pressure.

By Yuka Obayashi

TOKYO, Oct 16 (Reuters) - Oil prices slid on Friday dragged down by concerns that a spike in COVID-19 cases in Europe and the United States is curtailing demand in two of the world's biggest fuel consuming regions, while a stronger U.S. dollar also added to pressure.

Brent crude futures for December LCOc1 dropped 44 cents, or 1.0%, to $42.72 a barrel by 0437 GMT, while U.S. West Texas Intermediate (WTI) crude futures for November delivery CLc1 slid 40 cents, or 1.0%, to $40.56 a barrel.

Both benchmarks fell slightly the previous day and are on track to remain little changed for the week.

"Worries over weakening fuel demand in Europe due to a resurgence in COVID-19 cases and a higher U.S. dollar against the euro weighed on investor sentiment," said Kazuhiko Saito, chief analyst at Fujitomi Co.

In Europe, some countries were reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher COVID-19 restrictions in London on Friday.

Pandemic cases have surged in the U.S. Midwest and beyond, with new infections and hospitalisations rising to record levels in an ominous sign of a nationwide resurgence as temperatures get colder.

The dollar was headed for its best week of the month on Friday, as surging coronavirus cases and stalled progress toward U.S. stimulus had nervous investors seeking safe assets. FRX/

A technical committee of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, a group know as OPEC+, also ended a meeting on Thursday expressing concerns about rising oil supply as social restrictions to curb the spread of COVID-19 limit fuel usage.

"All eyes are on OPEC+ move from January," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

OPEC+ is set to reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January even as OPEC Secretary General Mohammed Barkindo admits fuel demand is looking "anaemic".

The bearish demand outlook and rising supply from Libya may mean OPEC+ could roll over the existing cuts into next year, OPEC+ sources said on Thursday.

There is an OPEC+ meeting scheduled for Nov. 30 to Dec. 1 to set policy.

"With uncertainty over OPEC+ future policy and the U.S. presidential election, oil prices will likely remain in a tight range for a while," Kikukawa said.

(Reporting by Yuka Obayashi; Editing by Christian Schmollinger and Jacqueline Wong)

((Yuka.Obayashi@thomsonreuters.com; +813-4563-2761;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More