Oil prices fell on Friday on concerns that major producers will move ahead with plans to ease their supply cuts even as a spike in COVID-19 cases in Europe and the United States is curtailing demand in two of the world’s biggest fuel consuming regions.
U.S. West Texas Intermediate (WTI) crude futures for November delivery slid 52 cents, or 1.3%, to $40.29 a barrel.
Brent crude futures for December dropped 51 cents, or 1.19%, to $42.48 a barrel.
Both benchmarks fell slightly the previous day; however, they are headed for small gains for the week.
A technical committee of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, a group know as OPEC+, ended a meeting on Thursday expressing concerns about rising oil supply as social restrictions to curb the spread of COVID-19 limit fuel usage.
OPEC+ is set to reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January even as OPEC Secretary General Mohammed Barkindo admits fuel demand is looking “anaemic.”
The bearish demand outlook and rising supply from Libya may mean OPEC+ could roll over the existing cuts into next year, OPEC+ sources said on Thursday.
There is an OPEC+ meeting scheduled for Nov. 30 to Dec. 1 to set policy.
“All eyes are on OPEC+ move from January,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“Still, a resurgence in coronavirus infections in Europe and some parts in the United States raised fears over weaker fuel demand, weighing on the market sentiment,” Kikukawa said.
In Europe, some countries were reviving curfews and lockdowns to fight a surge in new coronavirus cases, with Britain imposing tougher COVID-19 restrictions in London on Friday.
Pandemic cases have surged in the U.S. Midwest and beyond, with new infections and hospitalizations rising to record levels in an ominous sign of a nationwide resurgence as temperatures get colder.
“With uncertainty over OPEC+ future policy and the U.S. presidential election, the oil prices will likely remain in a tight range for a while,” Kikukawa said. 29dk2902l