Oil drops due to demand fears as Covid-19 intensifies

Oil was down on Friday morning in Asia, recording a weekly loss as the Covid-19 pandemic takes a turn for the worse in the US and dampens demand.

One of the largest oil consumers in the world, the US recorded 60,000 new cases on Thursday alone. Some of the largest states such as Texas, California and Florida all reported a record number of deaths.

Brent oil futures dropped 0.59% to $42.10 by 11:07 PM ET (4:07 AM GMT) while WTI futures slid 0.81% to $39.30.

While some investors were hoping for signs of continued economic recovery, the ever-increasing number of new cases globally could hamper this recovery. Some countries are already re-imposing lockdowns, with Melbourne, Australia, on day three of a second lockdown.

Hong Kong also tightened social distancing measures on Thursday, limiting group sizes to eight as the number of cases continues to increase in the city in what is being called a third wave of cases.

“Renewed coronavirus outbreaks in some parts of the world have added to reasons to expect the recovery to slow in the months ahead,” Capital Economics warned in a note.

Meanwhile, the World Health Organization (WHO) received evidence of Covid-19 mutating to be transmissible by air on Wednesday. If the mutation proves to be true, the resultant surge in cases could further dampen demand for the black liquid.

By Investing.com: https://www.investing.com/news/commodities-news/oil-drops-over-demand-fears-as-covid19-intensifies-2225458