Saturday, March 25, 2023

Oil Logs Worst Month Since March as Lockdowns Resurface By


© Reuters.

By Barani Krishnan – Oil prices fell for a third straight day on Friday, logging their worst monthly loss since March, as fresh curbs placed on business and people in France and Germany to curb the spread of the coronavirus led to fears of wider lockdowns in Europe and elsewhere.

“Halloween’s knocking on our doors, and it’s sure scary out there on both the oil and Covid fronts,” said John Kilduff, founding partner at Again Capital, New York energy hedge fund. 

New York-traded , the leading indicator for U.S. crude prices, settled down 38 cents, or 1.1%, at 35.79 per barrel. On Thursday, WTI hit $34.93 per barrel, sinking below $35 the first time since mid-June. 

For the week, WTI was down more than 10.2%, for its biggest weekly loss since April. For the month, it showed a drop of 11%, the sharpest decline since March.

London-traded , the global benchmark for oil, finished the session down 22 cents, or 0.6%, at $37.94 per barrel. Brent registered a weekly loss of 9% and was down 7.4% for October.

If the liquidation continues into next week, WTI’s $30 support may be at stake, said Kilduff.

“It’ll be tough to break for sure, but I think it’s surely going to be tested,” he said. “The drag on oil’s demand from Covid is going to be prolonged. I think the oil market tried to ignore the renewed threat of the pandemic for a while by buying into the narrative of vaccines and treatment under development. There was a lot of hope that people could go back to flying, driving, cruising and everything else. That has gone out of the window in the last couple of weeks, with the rising rate of infections.” 

The United States set yet another Covid-19 record on Thursday, with 90,456 cases reported, erasing the previous daily high of 80,662, NBC News reported. 

The U.S. as a whole has logged around 9 million coronavirus cases and almost 230,000 deaths from the virus.

In New Jersey, Governor Phil Murphy said curfew was possible after the state neighboring former Covid-19 hotspot New York reported 2,089 new coronavirus cases, its highest in nearly six months.

In France, President Emmanuel Macron ordered people to stay in their homes except for essential activities like buying food or getting medical care, Reuters reported. This follows the implementation of nightly curfews in several metropolitan areas, including Paris, as well as an order earlier this month to close bars and implement strict protocols on restaurants in the capital city.

Neighboring Germany has ordered non-essential services like restaurants and bars to be shut for at least a month while fellow EU nations like Italy and Spain have scaled back openings as well. 

Ireland and the UK have implemented restrictions to stem the spread of the virus as well.

The measures came as Europe reported 1.3 million new cases in the past seven days as of Tuesday, Reuters reported, citing data from the World Health Organization. Europe also reported more than 11,700 deaths, a 37% increase from the week before.

Oil prices have been under pressure since the Energy Information Administration reported on Wednesday a 4.3-million barrel rise in for last week, about four times more than the decline expected. 

The crude build reinforced concerns about demand for oil despite a drop in and that suggested fuel uptake was still holding.

Friday’s selloff was also exacerbated by a rise in the weekly count of from industry firm Baker Hughes, which reported a 10 rig increase this week over last. A rise in oil rigs is indicative of higher future production.

More pressure from oil came from a sell-off on Wall Street.

The  , the broadest index for U.S. stocks, fell more than 1.5% on the day, heading for its worst week and month since March, from the combination of pandemic fears and uncertainties over the outcome of next Tuesday’s election. Republican President Donald Trump is fighting for a second term in the Nov. 3 election against Democratic candidate Joe Biden whom polls show is leading.

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