Crude Oil Drops As COVID-19 Count Mounts; Analysts Await US Presidential Debate
Crude oil prices fell on Tuesday as Europe and the United States grappled with a surge in new coronavirus infections and investors were cautious ahead of the first US presidential debate.
Brent's November contract, which expires on Wednesday, fell 28 cents, or 0.7 per cent, to $42.15 per barrel by 0921 GMT (2:51 pm in India). The more-active Brent crude for December fell 31 cents, or 0.7 per cent, to $42.56 a barrel.
US West Texas Intermediate (WTI) crude dropped 32 cents, or 0.8 per cent, to $40.28 a barrel.
More than one million people have died of COVID-19 worldwide as of Tuesday, according to a tally by news agency Reuters, a bleak milestone in a pandemic that has devastated the global economy and fuel demand.
"Rising numbers of new corona cases in the United States and Europe are limiting the upside potential (for oil prices)," said Commerzbank analyst Carsten Fritsch.
The heads of the world's largest trading houses predicted tepid oil demand recovery and flat prices due to the coronavirus pandemic in coming months and possibly even years.
Meanwhile, all eyes were on the first US presidential election debate where Democrat Joe Biden and Republican Donald Trump will square off later on Tuesday (0100 GMT on Wednesday).
Hopes of a new economic stimulus programme in the United States lent some support to prices as Democratic lawmakers unveiled a new $2.2 trillion coronavirus relief bill, which House of Representatives Speaker Nancy Pelosi said was a compromise measure.
Investors will be looking for signs of growth in US demand from American Petroleum Institute data on Tuesday and from the Energy Information Administration on Wednesday.
Five analysts polled by Reuters on average estimate US crude oil inventories rose by 1.4 million barrels in the week to September 25. They expect gasoline stockpiles fell by 1.6 million barrels and distillate inventories, which include diesel and jet fuel, fell by 800,000 barrels.
Clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region have also kept markets on edge. If the conflict escalates, it could affect oil and gas exports from Azerbaijan.
"Disruptions to output and exports do not seem imminent, nevertheless the conflict has raised the geopolitical risk temperature," said oil broker PVM's Tamas Varga.
In a clear sign of weak demand in Japan, the world's fourth-biggest crude buyer, official data showed the country's imports of oil in August fell more than 25 per cent from a year earlier.
