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Oil prices fall over coronavirus resurgence, strong dollar; Bonny Light sheds $0.53

Oil prices climb further amid bleak outlook as Bonny Light hits $26.13

Oil prices slipped on Friday, hobbled by worries that an uptick in coronavirus infections in Europe and the U.S. is tapering demand in two of the world’s largest oil-consuming regions, while a stronger dollar also heightened pressure.

Brent crude futures for December eased by 60 cents or 1.39% to $42.56 a barrel by 11:11 West Africa Time (WAT), while U.S. West Texas Intermediate (WTI) crude futures for November delivery dropped by 51 cents or 1.25% to $40.45 a barrel.

Bonny Light, Nigeria’s banner crude grade, declined by 53 cents or 1.26% to $41.49. Qua Iboe, another major national grade, fell by 68 cents or 1.62% to $41.33 at 06:27 WAT.

Both Brent and WTI edged lower at the last session, but they remain almost unchanged from a week earlier.

“The reality is that we’re seeing now a pretty active spread of the pandemic across Europe and it’s spreading again in North America and that potentially will weigh on oil demand recovery,” said Lachlan Shaw, head of commodity research at the National Bank of Australia.

“Against that we still got Libya’s supply is growing quite strongly… It’s a market that could find the demand-supply balance soften a little bit.”

A number of countries in Europe were restoring lockdowns and curfews to contain an upscale in new coronavirus cases, with the UK imposing tougher restrictions in London on Friday.

Cases have soared in the U.S. Midwest and beyond, with new cases and hospitalisations climbing to historic levels in foreboding sign of a nationwide resurgence as temperatures fall further.

Read also: Oil prices slip as supply fears ease, Bonny Light up by $0.30

Oil also fell as the dollar was on track for its best week of the month on Friday, as rising Covid-19 cases and stalled progress towards U.S. stimulus made jittery investors seek safe assets. Oil priced in U.S. dollars tends to slip when the currency strengthens as fuel purchases for buyers making payment in other currencies become costlier.

“A higher U.S. dollar against the euro also weighed on investor sentiment,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

A technical panel of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a cartel known as OPEC+, ended their meeting on Thursday expressing fears of rising crude output as social restrictions to control the spread of the coronavirus limit fuel usage.

“All eyes are on OPEC+ move from January,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

OPEC+ is prepared to pare its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in Janaury even as OPEC Secretary General Mohammed Barkindo acknowledges fuel demand is looking “anaemic.”

The bearish demand prospects and increasing Libyan supply may imply OPEC+ could roll over the current cuts into 2021, OPEC sources said.

An OPEC+ meeting is planned for 30th November to 1st December to set policy.

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