Oil slides with renewed virus surge weighing on markets

Image: Brian Zinchuk, Pipeline News

Oil slumped near $40 in New York as the coronavirus weighs on markets and raises concerns about the outlook for consumption.

West Texas Intermediate for November delivery fell 0.9 per cent to US$39.93/bb at 12:41 p.m. London time. Brent for November dropped 0.5 per cent to US$41.73.

Recent days have underscored the patchy prospects for demand, with the International Energy Agency signalling caution, while traffic-congestion data suggest road-fuel consumption in parts of Europe is holding up relatively well.

At the same time, the market is contending with returning supply. Oil traders have reported a sharp increase in Iraqi exports for next month, while output from Libya has shown signs of rising this week.

Oil’s weekly loss has been stemmed by the prospect of resuming stimulus talks in the U.S., and a more optimistic demand view from some analysts. Goldman Sachs Group Inc. said oil consumption is currently just above 93 million bbls/d and may rise 1.8 million a day to the end of the year. That said, a virus surge in the U.K. and France is deepening short-term risks.

“This month has not been kind to the oil market,” said PVM Oil Associates analyst Stephen Brennock.

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