Oil set for worst month since March as coronavirus revival cuts travel

Road fuel sales in the UK slid for a fifth week to the lowest since July.Next week’s US election promises more volatility before an OPEC+ meeting at t
...
Representational photo of oil pipes (REUTERS)
Representational photo of oil pipes

Oil is poised for the biggest monthly slide since March on concern a resurgent pandemic in the U.S. and Europe will keep people hunkered down, crimping demand for auto and aviation fuel.

Futures have tumbled 9.8% this month in New York and they’re near the lowest since late May in London. Infections surged to a record in the U.S. Midwest, while parts of Europe tightened restrictions to stem second waves. Meanwhile, the return of Libyan supplies added to concerns of a crude glut.

Also check these Vehicles

Find more Cars
Mahindra Ekuv100 (HT Auto photo)
UPCOMING
BatteryCapacity Icon40 kWh Range Icon150 Km
₹ 8.25 - 10 Lakhs
Alert Me When Launched
Porsche 911 Gt3 (HT Auto photo)
Engine Icon3996.0 cc FuelType IconPetrol
₹ 2.50 Cr
Compare
View Offers
Mahindra S204 (HT Auto photo)
UPCOMING
₹ 12 Lakhs
Alert Me When Launched
Lexus Nx (HT Auto photo)
Engine Icon2494.0 cc FuelType IconMultiple
₹ 64.90 - 71.60 Lakhs
Compare
View Offers
Rolls-royce New Ghost (HT Auto photo)
UPCOMING
Engine Icon6750 cc FuelType IconPetrol
₹ 6.95 - 7.95 Cr
Alert Me When Launched
Mercedes-benz Amg E53 Cabriolet (HT Auto photo)
Engine Icon2999.0 cc FuelType IconPetrol
₹ 1.30 Cr
Compare

Road fuel sales in the U.K. slid for a fifth week to the lowest since July. Most European airlines trimmed regional capacity for November and December, while rising infections in the U.S. may thwart plans to increase capacity through year-end, according to Bloomberg Intelligence analysts George Ferguson and Francois Duflot.

Also Read : Russia may support global oil output cuts rollover beyond 2020: Sources

“It’s all about Covid-19 now and its impact on consumption," said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific. “There is a realization, now that Covid-19 is headed well into the second wave in Europe, that the recovery won’t be as linear as the market has been pricing in. There will be a consumption hit from Europe for sure as we head into the winter."

Next week’s U.S. election promises more volatility before an OPEC+ meeting at the end of November, when members will decide whether to delay the planned easing of output cuts. The head of Saudi Aramco’s trading arm said demand may be insufficient to absorb more OPEC+ crude.

“The market may move lower again next week," Oanda’s Halley said. “Any action to support oil has to come on the supply side from OPEC+."

Also Read : Facing wave of closures due to dip in fuel demand, oil refiners turn to biofuels

The growing nervousness over supplies is being reflected in oil’s market structure. Brent’s three-month timespread was $1.46 a barrel in contango -- where prompt prices are cheaper than later-dated ones. The widest contango in a month indicates rising fears of a glut.

The European Central Bank is gearing up for a new stimulus package in December as renewed lockdowns threaten a double-dip recession, but an aid package in the U.S. will likely to have to wait until after the Nov. 3 election, with prolonged negotiations failing to break an impasse.

Exxon Mobil Corp. became the latest company to succumb to the virus-driven demand crash. The oil major plans to slash its global workforce by 15% by the end of 2022 as it struggles to preserve dividends.

First Published Date: 30 Oct 2020, 10:52 AM IST
NEXT ARTICLE BEGINS

Check Latest Offers

Please provide your details to get Personalized Offers

Choose city
+91 | Choose city
Choose city

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy
Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.