Energy investors are concerned about the rising coronavirus cases, the prospect of new lockdowns and a controversial US election next week.
Global oil prices fell more than 1 percent on Friday, prolonging losses and heading for a second monthly decline as concerns increased that the surge in COVID-19 cases in Europe and the US could affect fuel economy.
Brent crude slipped for a third day, falling 60 cents, 1.6 percent, to $ 37.05 a barrel at 07:20 GMT after hitting a five-month low in the previous session. The December Brent contract expires on Friday.
US West Texas Intermediate (WTI) crude oil fell 53 cents, or 1.5 percent, to $ 35.64 a barrel after falling to its lowest level since June on Thursday.
Prices fluctuated between parity and more than 2 percent decline during Friday’s session as the “market worries about renewed lockdowns in Europe and US elections next week,” said a Singapore-based oil trader.
OCBC economist Howie Lee said, “The pressure to sell is rising again.”
“Numbers generally don’t look good and locking doesn’t help.”
[Bloomberg]The organization of the petroleum exporting countries and its allies, including Russia, a group called OPEC +, is expected to increase its production by 2 million barrels per day in January under its production agreement.
However, the top producers Saudi Arabia and Russia are in favor of maintaining the group’s production cut from currently around 7.7 million bpd next year, as production in Europe has ceased and Libya has resumed production.
OPEC + is expected to meet on November 30th and December 1st to set guidelines.
Responsibility for OPEC +
“With a slowdown in Europe that threatens global consumption and the return of Libyan production, OPEC + must now have a duty to reconsider its production increases from 2 million barrels a day in January,” said Jeffrey Halley, senior market analyst for Asia -pacific area at OANDA in Singapore.
Global coronavirus cases rose by a daily record of half a million on Wednesday, prompting governments across Europe to re-impose mobility restrictions to curb the spread.
While this has reduced mobility and fuel consumption in Europe, demand in the US continues for now, RBC Capital’s Mike Tran said in a note.
“Global mobility is becoming increasingly polarized in all regions this week,” he said.
“Discretionary activity in Europe is slowing, while both driving and flying in the US remain at their highest levels since the pandemic began.”