By Adedapo Adesanya
The Brent crude fell for the second time on Friday, November 6, dropping below $40 a barrel as the surging coronavirus cases and the uncertainty surrounding United States’ elections weighed on sentiment.
This pulled down the price of the product by 3.08 per cent or $1.26 to $39.67 per barrel and weakened the value of the US futures, West Texas Intermediate (WTI) crude, by 3.51 per cent or $1.36 to $37.43 a barrel.
Crude is ending the week with a decline after gains in the first half as the demand outlook worsened with refineries across the US and Europe shutting down as a result of the pandemic.
Italy recorded its highest daily number of COVID-19 infections on Thursday while cases surged by at least 120,276 in the United States, the second consecutive daily record as the outbreak spreads across the country.
France has now been in a nationwide lockdown for a week, but still reported a record 58,046 infections over 24 hours and a further 363 deaths. Paris is now banning food and alcohol takeaways and deliveries during the night curfew, between 22:00 and 06:00.
The second COVID-19 wave is also hitting several other countries hard including Europe’s largest economy, Germany, alongside Russia, Denmark, and Poland.
The Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, could delay bringing back 2 million barrels per day of supply in January, given weaker demand after new lockdowns.
Saudi Arabia and Russia will likely present cuts extension later this month so as to stabilise the market especially with supply developments in Libya compounding the problem facing the market.
US crude inventories plunged last week by 8 million barrels, against analyst expectations for an increase but this was relegated to the sideline as more serious issue pressed prices.
Concerning the United States poll, Mr Joe Biden appeared to be on the brink of victory in the presidential race amid increasing numbers of legal complaints from the incumbent, President Donald Trump, but he may have to deal with a split Congress.
He took over the majority in Georgia and Pennsylvania on Friday, edging closer to winning the White House as a handful of states continue to count votes.