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Oil Slides With Renewed Virus Surge Weighing on Markets


By Saket Sundria and Alex Longley

(Bloomberg) Oil slumped near $40 in New York as the coronavirus weighs on markets and raises concerns about the outlook for consumption. November futures fell on Friday as the dollar gained and equity markets declined. Recent days have underscored the patchy prospects for demand, with the International Energy Agency signaling caution, while traffic-congestion data suggest road-fuel consumption in parts of Europe is holding up relatively well.At the same time, the market is contending with returning supply. Oil traders have reported a sharp increase in Iraqi exports for next month, while output from Libya has shown signs of rising this week.

U.S. crude set to resume weekly downtrend

Oil’s weekly loss has been stemmed by the prospect of resuming stimulus talks in the U.S., and a more optimistic demand view from some analysts. Goldman Sachs Group Inc. said oil consumption is currently just above 93 million barrels a day and may rise 1.8 million a day to the end of the year. That said, a virus surge in the U.K. and France is deepening short-term risks.

“This month has not been kind to the oil market,” said PVM Oil Associates analyst Stephen Brennock. “Economic growth anxieties are likely to persist, which in turn will keep oil prices under the cosh.”

Prices
  • West Texas Intermediate for November delivery fell 0.9% to $39.93 a barrel at 12:41 p.m. London time
  • Brent for November dropped 0.5% to $41.73

On the supply side, OPEC has allowed Iraq to pump more crude next month by giving it extra time to make up for breaching its quota this year. But the puzzle for the market is whether an increase in cargoes means Iraq could exceed its new limit of 3.6 million barrels a day.

There have also been signs of growing weakness in the global Brent benchmark this week. On Thursday, the crude traded at its smallest premium to U.S. WTI since May. It’s also at its weakest to the Middle Eastern Dubai benchmark in four months.



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