Thursday , October 29 2020
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Oil Futures Remain Under Pressure from Demand Concerns

Summary:
Futures for crude oil logged a decline today. While the losses were not massive, both West Texas Intermediate and Brent grades of crude were heading for a 3% weekly loss. With the increasing number of coronavirus cases across the world, investors are worried that governments will reinstall travel restrictions and freeze business activity to prevent further spread of the virus. Such measures will result in a huge drop in oil consumption. Earlier this year, such restrictions resulted in the historic drop of oil prices into the negative territory. Europe seems especially vulnerable with a high number of new cases and a fragile economy. While US macroeconomic data was largely decent for most of the week, today’s durable goods orders report was disappointing, showing an increase of 0.4%

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Futures for crude oil logged a decline today. While the losses were not massive, both West Texas Intermediate and Brent grades of crude were heading for a 3% weekly loss.

With the increasing number of coronavirus cases across the world, investors are worried that governments will reinstall travel restrictions and freeze business activity to prevent further spread of the virus. Such measures will result in a huge drop in oil consumption. Earlier this year, such restrictions resulted in the historic drop of oil prices into the negative territory. Europe seems especially vulnerable with a high number of new cases and a fragile economy. While US macroeconomic data was largely decent for most of the week, today’s durable goods orders report was disappointing, showing an increase of 0.4% in August, which was far below the median forecast of 1.1%. Furthermore, it was a huge slowdown from the previous month’s 11.4% rate of growth.

Adding to the woes of oil, Libya is planning to resume its exports. On top of that, there are reports that Iran is ramping up its exports, defying US sanctions.

And if that was not enough, Baker Hughes revealed that the US oil rig count ended its long stretch of weekly declines. The number of US oil rigs increased by 4 to 183 this week. The number of gas rigs increased by 2 to 75.

Futures for delivery of WTI crude oil dropped by $0.18 (0.45%) to $40.13 per barrel as of 18:13 GMT on NYMEX today. Brent crude fell by $0.16 (0.38%) to $41.78 per barrel on ICE. At the same time, natural gas for delivery in October edged up 0.18% to $2.25 per million British thermal units on NYMEX.

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Vladimir Vyun
Vladimir is an online journalist with background in computer science and work experience in pension funds. He contributes news reports, fundamental analysis and sentiment forecasts to TopForexNews.com and CommodityBlog.com. His main specialization is the currencies of emerging economies and inter-market correlations with commodity and bond trading.

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