JOHANNESBURG – Oil dropped while gold edged higher after President Donald Trump said that he tested positive for Covid-19 with just one month left until the U.S. presidential election.
Brent slipped as much as 4.8%, to its lowest level since June. The global crude benchmark helped drag raw materials lower, with crop futures falling and copper earlier touching a seven-week low. A Bloomberg gauge of commodity spot prices had already fallen about 4% from an early September peak amid a pickup in virus cases around the world, and Trump’s positive result fuels more uncertainty over the election.
“A risk-off event in a market that was already softening due to concerns over fundamentals doesn’t leave much to hang onto in the short-term,” said Paul Horsnell, head of commodities research at Standard Chartered.
Crude demand has been struggling to recover amid a resurgent coronavirus, while supply from the Organization of Petroleum Exporting Countries and its allies continues to rise. Russia raised its crude and condensate production last month, while Saudi Arabia’s oil exports jumped to a four-month high in September. Although, total output from the oil-producer group was steady last month as the United Arab Emirates pulled production back sharply in atonement for recent months of oversupply.
Trump contracting the virus has sharpened focus on how the outcome of the election could impact oil markets, said Bjarne Schieldrop, chief commodities strategist at SEB AB. A win for Democrat Joe Biden could lead to a renewed nuclear deal with Iran and restrictions on fracking, Schieldrop said, potentially curbing future U.S. crude output.