Covid-19 and Chinese demand factors push oil prices down

London — Oil prices fell on Monday as concern about surging coronavirus cases globally dampened the prospects for demand recovery while China’s third-quarter economic growth was weaker than expected.

Brent crude for December slipped 16 US cents, or 0.4%, to $42.77 a barrel by 8.56am GMT. US West Texas Intermediate crude for November was down 11c, or 0.3%, at $40.77. The contract will expire on Tuesday.

Worldwide coronavirus cases crossed the 40-million mark on Monday, according to a Reuters tally.

“Even if the recent record-high new cases of Covid-19 worldwide have not yet caused demand forecasts to be revised further downwards, there is no sign as yet of the hoped-for recovery,” said Commerzbank analyst Eugen Weinberg.

Many European governments are tightening lockdowns to curb the spread of virus.

“This latest swathe of stringent restrictions will inevitably impede economic growth and undermine the fuel demand recovery,” said Stephen Brennock of oil broker PVM.

Meanwhile, China’s oil-buying frenzy earlier this year is expected to slow in the fourth quarter. Chinese refiners have slowed their processing rates in September.

China’s economy expanded by 4.9% in the third quarter from a year earlier, missing analyst expectations of 5.2%, government data showed.

Investors are also focusing on the Opec+ oil producer group’s joint ministerial monitoring committee (JMMC) meeting later on Monday.

The committee is expected to discuss the weakening demand outlook as well as increased output from Libya but is unlikely to recommend immediate action, sources told Reuters.

Energy companies in the US, the world's biggest oil producer, last week added the most oil and natural gas rigs since January, with crude prices having held at about $40 a barrel in recent months.

Reuters