Oil dipped below $41 a barrel as the dollar gained and European stock markets slumped.
Futures in New York dropped 1.4 per cent, after rising on Wednesday. Equities slid in Europe after corporate earnings failed to re-ignite rallies and prospects wilted for new stimulus from Washington before the November election. Paris and London are also facing renewed clampdowns as virus cases rise.
Oil-market sentiment had improved this week amid some positive signals on consumption from Asia. But the likelihood of drastic curbs on movement being reintroduced in some of Europe’s largest cities has fueled demand fears. London is set to face harsher measures from Friday night.
“Renewed concerns of new restrictions across Europe are weighing on sentiment and oil prices,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. A stronger dollar is also weighing on prices, he said.
- West Texas Intermediate for November delivery fell 1.4 per cent to $40.48 a barrel at 9:58 a.m. in London.
- Brent for December settlement declined 1.3 per cent to $42.74
U.S. inventory data due later Thursday could be a bright spot, with the American Petroleum Institute reporting a 5.42 million-barrel weekly decline in crude stockpiles, according to people familiar with the figures. That would be the biggest weekly drop since August if confirmed by the government’s numbers. The API report also showed lower gasoline and distillate stockpiles.
With the imposition of more measures to combat a resurgent virus in Europe and a renewed increase in U.S. infections, the market remains wary of plans by OPEC+ to raise oil supply in 2021 in line with its agreement earlier this year.
© 2020 Bloomberg L.P.