Oil down on Covid-19 rise

LONDON, September 28, 2020 – Oil was down on Monday morning in Asia as Covid-19 infection rates in the US threaten a recovery in demand. Crude oil is likely to have its first monthly fall since the April-May period.

Brent oil futures were down 0.66% to $42.13 by 11:25 AM ET (3:25 AM GMT) and WTI futures fell 0.67% to $39.98. Brent remained above the $40-mark after rolling over to the December contract on Sunday.

In the US a rapid rise in Covid-19 cases across Great Plains and Southern states has exacerbated concerns over future US demand. The specter of a continued delayed recovery, combined with the expiry of government-backed relief programs, has kept a lid on appetite for oil.

“New Covid-19 case numbers are accelerating in major US states, renewing fears of mobility restrictions challenging the ongoing oil demand recovery in the last quarter,” ANZ analysts said in a note, according to Reuters.

Oversupply worries also continue to dog the global market, with Libyan oil now coming back onto the market. Tanker tracking data has also shown Iran to be increasing its exports, with up to 1.5 million barrels per day (bpd) leaving the sanctions-bound state during September.

In the South Causcasus pipeline corridor, clashes between Azerbaijan and Armenia are giving rise to concerns over the stability of gas and oil supplies routed through the region. The fighting is reportedly the heaviest since 2016.

First published on Investing.com

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