Oil prices edge lower as pandemic sparks demand fall
Oil prices dropped for a second day on Friday over worries about an escalating case of the coronavirus, which United States President Donald Trump just tested positive for, and breakdown of talks among negotiators of a U.S. stimulus package.
The chances that an oil supply surge around the world will suppress a feeble price recovery also hurt trade.
Brent crude futures slid by 1.74% or 4.25% to $39.19 per barrel at 11:34 West Africa Time just as U.S. West Texas Intermediate (WTI) crude futures lost 1.69% or 4.36% to $37.03.
Bonny Light, Nigeria’s premium oil grade, eased by $1.64 or 4.04% to $38.94 on Thursday. But Qua Iboe, another key national oil grade, bucked the general losing trend in the market that same day as it climbed by $1.36 or 3.38% to $41.54.
Brent and WTI are on track for declines of 5% and 6% in that order this week for a second straight week of depreciation.
In a Twitter statement, Trump said he and First Lady Melania Trump had contracted the virus.
Oil was already posting losses after U.S. House Speaker Nancy Pelosi kept struggling to get a bipartisan deal for greater economic succour in response to the pandemic and the White House stoked fears of crumbling demand without further support for the economy.
“It was a weak market already and this event has come along and added uncertainty, giving pause for people to say, ‘you know what, I’m taking some risk off the table’,” Lachlan Shaw, commodity research lead at National Australia Bank in Melbourne.
Read also: Oil prices dip over bleak demand prospects; Bonny Light gains $0.47
Oil output from the Organisation of the Petroleum Exporting Countries (OPEC) swelled by 160,000 barrels per day (bpd) in the month that just went by from the preceding month, a Reuters survey revealed.
The upsurge derived from bigger supplies from Libya and Iran, both OPEC members excused from an output agreement between the organisation and its Russia-led allies, a cartel knows as OPEC+.
Production in Libya has climbed well beyond analysts’ forecast following the lifting of a blockade by the Libyan National Army. The North African nation’s oil supply has lifted to 270,000 bpd as it intensifies export efforts, a Libyan source told Reuters on Thursday.
At 34 million, global pandemic cases are 2 million larger than at the end of last week according to Reuters tallies.
A grievous history was made this week when deaths reached the one million mark and many nations are firming up restrictions and mulling lockdowns as infections surge, raising fears about the implications for demand recovery.
Jeffrey Halley, senior market analyst at OANDA, said “oil’s upside was always likely to be limited as fears rise about the global consumption picture and rising OPEC+ production.”