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Oil prices drop 4% as US vote count continues, coronavirus cases rise

France reported record coronavirus cases, intensifying concerns that additional lockdowns in Europe could weigh on demand

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Oil Prices | US Presidential elections 2020

Reuters  |  New York 

Crude oil
In the US election, Democratic presidential candidate Joe Biden took the lead over President Donald Trump in Georgia and Pennsylvania on Friday, edging closer to winning the White House

Oil fell below $40 a barrel on Friday as rising global cases stoked fears about lackluster demand and as drawn-out vote counting in the US presidential election kept on edge.

France reported record cases, intensifying concerns that additional lockdowns in Europe could weigh on demand.

In the US election, Democratic presidential candidate Joe Biden took the lead over President Donald Trump in Georgia and Pennsylvania on Friday, edging closer to winning the White House as a handful of states continue to count votes.

Three days after polls closed, Biden has a 253 to 214 lead in the state-by-state Electoral College vote that determines the winner, according to Edison Research. Winning Pennsylvania's 20 electoral votes would put the former vice president over the 270 he needs to secure the presidency.

Brent crude fell $1.46, or 3.6 per cent, to $39.47 by 2:07 p.m. EST (1907 GMT). US West Texas Intermediate (WTI) dropped $1.58, or 4.1 per cent to $37.21 a barrel.

Still, Brent was heading for a 5 per cent weekly gain, and US crude was up 4 per cent on the week.

Diminishing prospects of a large US stimulus package were also weighing on the market.

US Senate Majority Leader Mitch McConnell said on Friday that economic statistics including a 1 percentage point drop in the US unemployment rate showed that Congress should enact a smaller stimulus package that is highly targeted at the effects of the pandemic.

"Crude oil is very sensitive to the stimulus expectations, which just took a hit for the worse," said Bob Yawger, director of energy futures at Mizuho. "The coronavirus situation is as negative a demand indicator as you can get," he said.

Coronavirus cases in the United States surged by at least 120,276 on Thursday, according to a Reuters tally, the second consecutive daily record rise as the outbreak spreads in every region.

Italy recorded its highest daily number of Covid-19 infections on Thursday. France registered a record 60,486 new confirmed coronavirus cases on Friday, after posting a record 58,046 on Thursday, health ministry data showed.

Providing some support, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, could delay bringing back 2 million barrels per day of supply in January, given weaker demand after new lockdowns.

US crude inventories plunged last week by 8 million barrels, against analyst expectations for an increase.

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First Published: Sat, November 07 2020. 01:15 IST
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