Just when the world had started feeling optimistic for Covid-19 to end soon, sudden surge in cases was reported. After seeing the cases dip during June-August, Europe is witnessing a far higher number of cases now. Many other countries are also going through a resurgence.
There is palpable fear that the spread of the pandemic can further dampen the already slowing economic activity. Governments across Europe imposed fresh restrictions recently to curb the spread of the coronavirus.
Reduced industrial activity had adversely affected fuel consumption. With U.S. election this week, markets exposed their anxiety and the Brent crude fell below $38 with WTI at $36, dipping to its lowest since June this year.
Oil prices also slid because of a rise in U.S. crude inventories, amid fears of oversupply and weak fuel demand. This more than expected build in U.S. crude stock came with the receding concerns over supply disruption from Hurricane Zeta.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, had planned to raise output by 2 million barrels per day (bpd) in January. However, top producers Saudi Arabia and Russia were in favour of maintaining the group's current output reduction of about 7.7 million bpd into next year. The policy meeting is scheduled to be held over30 November and 1 December.
In the United States, energy companies increased their rig count by five to take the total to 287 in the week to Oct. 23, the most since May this year. Libya's National Oil Corp also indicated that production would reach 1 million barrels per day (bpd) in four weeks, a quicker ramp-up than many analysts had predicted.
Reduced demand in the face of oversupply could further delay the recovery in oil prices.
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