Oil Prices Slip As New Wave Of COVID-19 Cases Weigh On Outlook

LONDON: Oil prices dipped on Thursday as a surge in coronavirus cases and tighter pandemic restrictions around the world weighed on fuel demand expectations and dragged down global equities.

Brent crude was down 8 cents to $44.26 a barrel by 1218 GMT. U.S. West Texas Intermediate crude slipped 28 cents to $41.54 a barrel.

Adding to pressure on prices, a strengthening dollar made oil more expensive for holders of other currencies.

The Brent price contango, a market structure in which near-month barrels are cheaper than those in later months, implying current oversupply, was at its shallowest in more than four months. This suggests concerns about a glut are easing.

U.S. crude inventories rose 768,000 barrels last week, less than the 1.7 million barrels analysts expected in a Reuters poll, government data showed.

Stores of distillates, which include diesel and heating oil, fell by 5.2 million barrels, far more than expectations.

But concerns about the demand outlook persist, as the U.S. death toll from COVID-19 surpassed 250,000, while daily cases in Japan and Russia surged. Among tougher curbs to prevent the virus spreading, New York City shut public schools.

Worries about the economic impact of the pandemic outweighed optimism about the roll out of vaccines. Pfizer and BioNTech are seeking U.S. and European authorisation for their vaccine next month.

Equity markets in Asia and the United States have weakened amid the uncertainty.

“Investors are also booking profits from the recent rally before the U.S. Thanksgiving holiday later this month,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

Concerns about oversupply remain. Libya’s National Oil Corporation (NOC) and France’s Total discussed NOC’s efforts to raise capacity and increase production.

OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia and other producers, will discuss policy at a meeting on Nov. 30 and Dec. 1.

Sources says OPEC+ members are leaning towards delaying a plan to boost output in January by 2 million barrels per day (bpd).

(Additional reporting by Yuka Obayashi in Tokyo; Editing by Jason Neely and Edmund blair)

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