By Elishya Perera
PHILADELPHIA, Pennsylvania, USA (CWBN)_Oil prices dipped below $38 a barrel in New York as uncertainty of the US Election and new lockdowns imposed in Europe sparked concern.
Futures dropped 2.7%, with equity markets also lower as investors took risk off the market.
Although Biden is closing in on the 270 electoral votes he needs to win the presidency, incumbent President Donald Trump has sought a recount in several key states, which could lead to a prolonged period of uncertainty. On the other hand, chances for a split Congress raises the likelihood of any post-election virus aid package being smaller than initially expected.
“A presidential election doesn’t overnight solve the virus, the lockdowns, the lack of mobility in the country,” said Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago. “The political uncertainty really leaves people hanging on and just waiting and seeing. You’re not going to see that pick up in fuel demand and oil demand for the time being”.
In addition to the surge in the number of daily infections in the US, the oil market is also contending with renewed lockdown measures across Europe which has sparked concern about the outlook for demand.
“There is a definite negative sentiment in Europe and around the world at the moment, due to the restored lockdowns that are mushrooming across countries and regions,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
West Texas Intermediate for December delivery fell $1.05 to $37.74 a barrel at 10:10 a.m. in London, while Brent for January settlement lost 96 cents, or 2.4%, to $39.97.
Meanwhile, Royal Dutch Shell Plc announced that it will shut its 211,000 barrel-a-day Convent facility in Louisiana, as the company plans to shrink its refining business after Covid-19 hammered global demand and profits.
Edited by Kaveesha Fernando
