Dark Monday Hits Oil Market

Dark Monday Hits Oil Market
It's a dark Monday in the oil market, according to Rystad Energy.

It’s a dark Monday in the oil market.

That’s what Rystad Energy’s head of oil markets Bjornar Tonhaugen said in a statement sent to Rigzone on Monday, adding that traders are “finally” pricing in Covid-19’s second wave as the pandemic’s infections break daily records in many countries across the globe.

“The latest infection numbers from the U.S. and France, among other nations, are rising by wide margins and restrictions and lockdowns are reinstated globally,” Tonhaugen said in the statement.

“We have long warned that a ‘second wave’ of strict coronavirus restriction measures could be re-imposed, and it’s now happening for real,” he added.

Tonhaugen noted that the curfew announced in Spain and the partial lockdown in Italy threatens to reduce the countries’ 600,000 barrel per day (bpd) and 650,000 bpd road fuel demand, as well as further cut the countries’ flight count.

“Moreover, the U.S. Covid-case count has risen to a new record just one week before the elections, creating further uncertainty,” Tonhaugen said. 

“Tighter Covid-19 restrictions could come should there be a change of power,” he added.

In the statement, Tonhaugen highlighted that waiting for a vaccine sometime next year won’t save oil demand in the near term and warned that the market is “increasingly scared”.

The price of Brent Crude oil dropped below $41 per barrel on Monday. The price of West Texas Intermediate oil dropped below $39 per barrel.

Globally, as of October 26, 10.15am CET, there have been 42,745,212 confirmed cases of Covid-19, with 1,150,961 deaths, according to the latest figures from the World Health Organization (WHO). The number of global cases has increased consecutively week on week since September 14, WHO figures show. Global deaths increased by 7.47 percent last week but fell by 7.33 percent in the week before, WHO data outlines.

To contact the author, email andreas.exarheas@rigzone.com


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