Picture: 123RF/PAVEL IGNATOV
Picture: 123RF/PAVEL IGNATOV

London — Oil prices fell on Tuesday as Europe and the US grappled with a surge in new coronavirus infections and investors were cautious ahead of the first US presidential debate.

Brent’s November contract, which expires on Wednesday, fell 28c, or 0.7%, to $42.15 a barrel by 9.21am GMT. The more active Brent crude for December fell 31c, or 0.7%, to $42.56 a barrel. US West Texas Intermediate (WTI) crude dropped 32c, or 0.8%, to $40.28 a barrel.

More than 1-million people have died of Covid-19 worldwide as of Tuesday, a bleak milestone in a pandemic that has devastated the global economy and fuel demand.

“Rising numbers of new Covid-19 cases in the US and Europe are limiting the upside potential [for oil prices],” said Commerzbank analyst Carsten Fritsch.

The heads of the world’s largest trading houses predicted tepid oil demand recovery and flat prices due to the pandemic in coming months and possibly even years.

Meanwhile, all eyes were on the first US presidential election debate when Democrat Joe Biden and Republican Donald Trump will square off later on Tuesday (1am GMT on Wednesday).

Hopes of a new economic stimulus programme in the US lent some support to prices as Democratic lawmakers unveiled a new $2.2-trillion coronavirus relief bill, which House of Representatives speaker Nancy Pelosi said was a compromise measure.

Investors will be looking for signs of growth in US demand from American Petroleum Institute data on Tuesday and from the Energy Information Administration on Wednesday.

Five analysts polled by Reuters estimate, on average, that US crude oil inventories rose by 1.4-million barrels in the week to September 25. They expect petrol stockpiles fell by 1.6-million barrels and distillate inventories, which include diesel and jet fuel, fell by 800,000 barrels.

Clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region have also kept markets on edge. If the conflict escalates, it could affect oil and gas exports from Azerbaijan.

“Disruptions to output and exports do not seem imminent, nevertheless the conflict has raised the geopolitical risk temperature,” said oil broker PVM’s Tamas Varga.

In a clear sign of weak demand in Japan, the world’s fourth-biggest crude buyer, official data showed the country’s imports of oil in August fell more than 25% from a year earlier.

Reuters

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.