Oil prices fall 4% in an uncertain week

07 Nov Oil prices fall 4% in an uncertain week

Oil settled below $40 a barrel on Friday as rising global coronavirus cases stoked fears about lackluster demand and as drawn-out vote counting in the U.S. presidential election kept markets on edge.

Brent crude settled down $1.48, or 3.62%, at $39.45 a barrel. U.S. West Texas Intermediate (WTI) dropped $1.65, or 4.25% to $37.14 a barrel.

Still, both contracts gained on the week with Brent up 5.8%, and U.S. crude rising 4.3%.

Diminishing prospects of a large U.S. stimulus package were also weighing on the market.

U.S. Senate Majority Leader Mitch McConnell said on Friday that economic statistics including a 1 percentage point drop in the U.S. unemployment rate showed that Congress should enact a smaller coronavirus stimulus package that is highly targeted at the effects of the pandemic.

“Crude oil is very sensitive to the stimulus expectations, which just took a hit for the worse,” said Bob Yawger, director of energy futures at Mizuho. “The coronavirus situation is as negative a demand indicator as you can get,” he said.

U.S. coronavirus cases surged by over 120,000 on Thursday, according to a Reuters tally, the second consecutive daily record rise as the outbreak spreads in every region.

Italy recorded its highest daily number of COVID-19 infections on Thursday. France registered a record 60,486 new confirmed cases on Friday, after posting a record 58,046 on Thursday, health ministry data showed.

Providing some support, the Organization 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.

U.S. crude inventories plunged last week by 8 million barrels, against analyst expectations for an increase.