Crude Oil Extends Losses As Rising COVID-19 Cases Spur Demand Concerns
Oil prices fell for a second day on Wednesday as rising coronavirus cases prompted concerns about further restrictions on global economic activity that could curb fuel demand. Brent crude for November delivery dropped 57 cents, or 1.4 per cent, to $40.46 per barrel by 1005 GMT (3:35 pm in India). West Texas Intermediate fell 14 cents, or 0.4 per cent, to $39.15 per barrel.
The November Brent contract expires today, to be replaced by the December contract, which was down around 0.5 per cent at $41.36.
The benchmarks fell more than 3 per cent on Tuesday as global COVID-19 cases passed 1 million, having doubled in three months.. A monthly oil poll by news agency Reuters showed prices would have little upside this year.
"The increasing number of COVID-19 cases continues to raise alarm bells on energy demand," said Avtar Sandu, senior commodities manager at Phillip Futures.
"Concerns about stagnating demand and the return of Libyan exports continue to put pressure on oil prices," said Norbert Rucker from Julius Baer.
ING Economics also pointed out in a note: "Whilst demand is an issue for the market, the supply side of the equation is not helping either."
Libya's Sarir oilfield, which was producing more than 300,000 barrels per day (bpd) last year, restarted output after an eight-month blockade.
CEOs of the world's biggest trading companies are forecasting a weak recovery for oil demand and little movement in prices in the coming months and potentially years.
Marathon Petroleum Corp, the largest oil refiner in the United States, started imposing job cuts on Tuesday, according to people familiar with the matter.
Royal Dutch Shell also said it would cut up to 9,000 jobs.
To counter the fall in demand, the Organization of the Petroleum Exporting Countries is unlikely to increase oil production as planned from January next year, top oil traders said on Tuesday.
The market looked past data from the American Petroleum Institute on Tuesday showing U.S. crude oil stocks fell against expectations, focusing instead on the rise in gasoline inventories.
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