Oil slides as Opec mulls supply cuts
Brent crude futures drop as spike in Covid-19 cases in Europe and the US slows demand
Tokyo — Oil prices fell on Friday on concerns that major producers will move ahead with plans to ease their supply cuts even as a spike in Covid-19 cases in Europe and the US is curtailing demand in two of the world’s biggest fuel consuming regions.
Brent crude futures for December dropped 22c, or 0.5%, to $42.94 a barrel by 1.54am GMT, while US West Texas Intermediate (WTI) crude futures for November delivery slid 16c, or 0.4%, to $40.8 a barrel.
Both benchmarks fell slightly the previous day, but are headed for small gains for the week.
A technical committee of the Organisation of the Petroleum Exporting Countries (Opec) and allied oil producers, a group know as Opec+, ended a meeting on Thursday expressing concerns about rising oil supply as social restrictions to curb the spread of Covid-19 limit fuel usage.
Opec+ is set to reduce its supply cuts of 7.7-million barrels per day (bpd) by 2-million bpd in January even as Opec secretary- general Mohammed Barkindo admits fuel demand is looking “anaemic.”
The bearish demand outlook and rising supply from Libya may mean Opec+ could roll over the existing cuts into next year, Opec+ sources said on Thursday.
There is an Opec+ meeting scheduled for November 30 to December 1 to set policy.
“All eyes are on the Opec+ move from January,” said Hiroyuki Kikukawa, GM of research at Nissan Securities.
“Still, a resurgence in coronavirus infections in Europe and some parts in the US raised fears over weaker fuel demand, weighing on the market sentiment,” he said.
In Europe, some countries are reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher Covid-19 restrictions in London on Friday.
Pandemic cases have surged in the US Midwest and beyond, with new infections and hospital admissions rising to record levels in an ominous sign of a nationwide resurgence as temperatures get colder.
“With uncertainty over Opec+ future policy and the US presidential election, the oil prices will likely remain in a tight range for a while,” Kikukawa said.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.