Oil prices slump 4% on jitters over Europe lockdowns, US elections

Oil prices slump 4% on jitters over Europe lockdowns, US elections

Oil producers thrashed out a compromise deal on Sunday to cut production by nearly 10 million
File photo of an oil field. (Photo: AFP/Frederic J. BROWN)

SINGAPORE: Oil prices slumped more than 4 per cent on Monday (Nov 2) to the lowest levels since May on worries a swathe of coronavirus lockdowns across Europe will weaken fuel demand, while traders braced for turbulence during the US presidential election week.

Brent crude for January was at US$36.32 a barrel, down US$1.62, or 4.3 per cent, by 12.18am GMT (8.18am, Singapore time), while US West Texas Intermediate fell US$1.62, or 4.5 per cent, to US$34.17 a barrel. Brent earlier hit a low of US$35.74 a barrel while WTI slipped to US$33.64 a barrel.

Countries across Europe have reimposed lockdown measures aimed at slowing COVID-19 infection rates which have accelerated in the continent in the past month.

"The lockdown measures announced by UK and by Italy are just adding to the deteriorating European situation," Michael McCarthy, chief market strategist at CMC Markets in Sydney said.

"A lot of traders are now looking at the US and their rising infection rates and wondering if Europe is providing the model for what will happen in the US in the coming weeks."

READ: US COVID-19 cases keep rising in grim march to Election Day

Concerns about weakening demand and rising supplies caused oil prices to fall for a second straight month in October, with WTI falling 11 per cent and Brent 8.5 per cent.

Rising supplies from Libya and Iraq, members of the Organization of the Petroleum Exporting Countries (OPEC) offset production cuts by other members and caused the group's output to rise for a fourth month in October, a Reuters survey showed.

OPEC and their allies including Russia, a group known as OPEC+, are cutting output by about 7.7 million barrels per day in a pact aimed at supporting prices.

OPEC+ is scheduled to hold a policy meeting over Nov 30 and Dec 1.

Source: Reuters/dv

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