Oil slides nearly 3% as new lockdowns threaten demand recovery

In this news, we discuss the Oil slides nearly 3% as new lockdowns threaten demand recovery.

NEW YORK (Reuters) – Oil prices fell nearly 3% on Thursday as new restrictions aimed at stemming a spike in COVID-19 infections increased uncertainty over the outlook for economic growth and a resumption of fuel demand.

Brent LCOc1 futures fell $ 1.09, or 2.5%, to $ 42.23 a barrel at 10:24 a.m. EDT (2:24 p.m. GMT), while U.S. West Texas Intermediate (WTI) crude CLc1 fell. down $ 1.17, or 2.9%, to $ 39.87.

Traders noted that the price drop was limited by industry data showing a drop in US oil inventories last week.

The American Petroleum Institute industry group said on Wednesday that U.S. inventories of crude, gasoline and distillates all fell in the week to October 9.

The US Energy Information Administration is due to release its weekly data at 11 a.m. [EIA/S]

Some European countries are re-launching curfews and lockdowns in an attempt to contain the rise in new coronavirus cases, with Britain due to impose tighter COVID-19 restrictions on London from midnight on Friday.

“If demand weakens significantly, OPEC + will have no choice but to cancel its production increase if it does not want to risk yet another oversupply and another drop in prices,” Commerzbank said. .

OPEC and its allies, called together OPEC +, are expected to reduce their production by 2 million barrels per day (b / d), against 7.7 million b / d currently, in January.

OPEC + was 102 percent on its agreement to cut oil supply in September, two OPEC + sources told Reuters ahead of a technical committee meeting on Thursday.

The group will ensure that oil prices do not drop sharply again when it meets to define its policy at the end of November, the OPEC secretary general said, adding that demand has recovered. slower than expected.

Major global oil traders Vitol, Trafigura and Gunvor said they saw a slow recovery in demand for oil due to a second wave of coronavirus with oil prices rising to or above $ 50 a barrel only in October of next year.

“The toxic brew of COVID-19 lockdowns, especially in Europe, and the apparent end of any hope of a US stimulus deal ahead of the election is weighing on risk assets,” said Bob Yawger, chief contracting officer at term on energy at Mizuho in New York.

Additional reporting by Ahmad Ghaddar in London, Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Marguerita Choy and Kirsten Donovan

Original © Thomson Reuters

Originally posted 2020-10-15 07:56:10.

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