Oil down on spiking Covid-19 cases, low demand

Oil was down on Friday morning in Asia as the Covid-19 pandemic reasserted its influence against this week’s buoyant prices.

Brent oil futures fell 1.59% to $42.84 by 11:37 PM ET (3:37 AM GMT) and WTI futures slid 1.97% to $40.31. Both Brent and WTI futures stayed above the $40 mark.

Fears over demand have capped a week of gains for oil as a second wave of Covid-19 cases builds across the US and Europe, threatening to reduce economic activity even further. In the US, coronavirus cases have reached an all-time high of 14,231 a day according to Johns Hopkins University data, with higher numbers expected to follow.

“Surging cases of coronavirus cases across the globe have fanned concerns over weaker fuel demand,” Kazuhiko Saito, chief analyst at Fujitomi Co, told Reuters.

The good news on the vaccine front from Pfizer Inc (NYSE:PFE) and BioNTech (F:22UAy) at the start of the week is now factored into prices, with the initial excitement turning to realization that any effect will only be seen well into 2021.

“Views that it would take time to see any benefit from a Covid-19 vaccine also prompted investors to unwind their long positions,” Saito also said, adding that WTI futures look to be headed toward around $39.5 a barrel.

Responding to the global conditions, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman has said that the Organization of Petroleum Exporting Countries and its allies (<a href=’https://theenergyyear.com/companies-institutions/opec/’>OPEC+) is looking into maintaining its current supply cuts well into 2021, given agreement between its members.

Crude oil supply data released by the US Energy Information Administration (EIA) on Thursday showed a surprise 4.278-million-barrel build during the week ending Nov. 6, against the forecast draw of 913,000 barrels.

Crude oil supply data from the American Petroleum Institute on Tuesday showed a draw of 5.147 million barrels.

First published on Investing.com