Oil prices slip as rampant Covid-19 weighs on fuel demand

London — Oil futures dipped on Thursday as a surge in coronavirus cases and tighter economic restrictions around the world weighed on fuel demand expectations, also dragging down equities globally.

Brent crude futures were down 27c to $44.07 a barrel by 9.11am GMT. US West Texas Intermediate (WTI) crude slipped 43c to $41.39 a barrel. A rising dollar made oil more expensive for holders of other currencies.

But Brent’s six-month contango, a market structure implying current oversupply, was at its shallowest in more than four months on Thursday, suggesting concerns over a glut are easing somewhat.

US crude inventories rose 768,000 barrels last week, less than the 1.7-million barrels analysts expected in a Reuters poll, government data showed. Distillate stockpiles, which include diesel and heating oil, fell by 5.2-million barrels, far exceeding expectations.

Still, the US death toll from Covid-19 surpassed a grim new milestone of 250,000 on Wednesday, as New York City shut public schools.

In Asia, Tokyo posted its highest coronavirus alert level on Thursday as its daily tally of new infections hit a record high of 534 cases.

Russia surpassed 2-million coronavirus cases after reporting record high daily rises in infections and deaths related to Covid-19.

Worries about coronavirus-related economic damage overshadowed upbeat news from Pfizer and BioNTech that are seeking US and European authorisation for their Covid-19 vaccines next month.

Asian shares drifted off all-time highs on Thursday and widening Covid-19 restrictions in the US weighed on Wall Street. “Investors are also booking profits from the recent rally before the US Thanksgiving holiday later this month,” said Kazuhiko Saito, chief analyst at Fujitomi.

Raising the spectre of further oversupply, Libya’s National Oil Corporation (NOC) and France’s Total discussed NOC’s efforts to raise capacity and increase production.

Oil cartel Opec and its allied other producers, including Russia (Opec+), is due to discuss policy at a full ministerial meeting on November 30 and December 1.

Members of Opec+ are leaning towards delaying their current plan to boost output in January by 2-million barrels per day (bpd), sources have said. 

Reuters