By Adedapo Adesanya
Brent crude oil futures fell by nearly 5 per cent on Friday after it was announced that United States President, Mr Donald Trump, tested positive for the coronavirus.
The international crude benchmark went below $40 after it depreciated by $1.83 or 4.47 per cent to $39.10 per barrel while the United States West Texas Intermediate (WTI) crude went down 4.31 per cent or $1.67 to $37.05 barrel.
The news that the US President and First Lady, Mrs Melania Trump, tested positive for the deadly virus created a new round of market uncertainty and reinforces fears of another wave of the virus, which will harm the economy and projected energy demand. It triggered a volatile move across the markets and put COVID-19 back into the spotlight for investors.
The announcement is also expected to heighten existing political uncertainty around the US election on November 3, another major risk event for markets.
Adding to Friday’s bearish news, the US Congress failed to agree on a fiscal stimulus package designed to save the economy by speeding along with the recovery. The only development in this direction was the House of Representatives approving a Democrat-proposed bill for an additional $2.2 trillion in stimulus, but analysts note that this might fail at the Senate.
Meanwhile, new data from the Organisation of the Petroleum Exporting Countries (OPEC) showed that rising global output threatens to destroy the weak price recovery.
OPEC’s oil production rose in September, by 160,000 barrels per day. The increase came from Libya and Iran, which are both exempt from the production-cutting deal that OPEC agreed on earlier this year to prop up prices.
Libya, which last month restarted production at three oil export terminals and several fields, is now pumping 270,000 barrels per day. Analysts note that there will be a gradual ramp-up of supply to 650,000 barrels a day in early 2021, a level below pre-crisis levels of 1.2 million barrels a day.
OPEC export data was also bearish: according to the latest figures, the cartel exported 18.2 million barrels per day last month, versus 17.53 million barrels a day in August. OPEC+ exported 22.84 million barrels per day in September, up from 22.11 million barrels per day in August.
Also, depressing prices are new COVID-19 cases rising fast in Europe, the US, and India. The global total passed 34 million this week, up by a million from a week earlier. The death toll from the disease passed the 1-million mark this week as well.
Investors in oil markets have been keeping a close watch on the disease’s expansion, which has worsened in parts of Europe because it has a direct effect on the commodity if economies begin to slow down.
Dipo Olowookere