Oil prices slide amid coronavirus concerns

Andrew Cummings
October 18, 2020

The West Texas Intermediate (WTI) for November delivery lost 8 cents to settle at 40.88 USA dollars a barrel on the New York Mercantile Exchange, while Brent crude for December delivery decreased 23 cents to 42.93 dollars a barrel on the London ICE Futures Exchange.

Oil prices have climbed this week despite concerns about renewed lockdowns hitting fuel demand as COVID-19 infections surge in Europe. Earlier, both benchmarks were down more than $1 a barrel.

"Crude prices are looking very vulnerable as the coronavirus continues to spread like wildfire across Europe and trending higher in the US", Moya added.

The EIA's weekly report comes up next in the docket. The average LNG price for December delivery into North-East Asia was estimated at $5.80 per million British thermal units (mmBtu), up 10 cents from the previous week.

The Organization of the Petroleum Exporting Countries (OPEC), has raised its global oil demand forecast for 2020 by 60,000 barrels per day (b/d) from last month to 90.29 million b/d in October, as it sees an improvement in China's demand for most oil products except for jet fuel."China so far appears to be the only country globally moving steadily on the path to recovery based on gradually improving economic indicators, particularly in industrial production, which are rising from month to month", OPEC said in its latest monthly oil market report released yesterday.

A Joint Technical Committee, which includes representatives from key OPEC+ producers such as Saudi Arabia and Russian Federation, met to review compliance with its global oil output cuts.

Assuming global demand rebounds as expected, this in theory leaves room for OPEC members to increase output in 2021 by over 3.8 million bpd from September's rate without causing a glut.

Oil prices were trading up on Tuesday afternoon before the API's data release, despite industry reports from the IEA and OPEC that suggested oil demand growth could be weaker than anticipated.

In the United States, drillers have begun adding oil rigs since cutting them to a 15-year low in August.

President Donald Trump said he is willing to raise his offer of $1.8 trillion for a COVID-19 relief deal with Democrats in the U.S. Congress, but the idea was shot down by his fellow Republican, Senate Majority Leader Mitch McConnell.

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