LONDON: Oil prices fell 5pc on Friday after US President Donald Trump tested positive for Covid-19 and negotiators failed to agree a US stimulus package just as rising global oil output threatens to overwhelm a weak price recovery.
Brent crude slipped on the Trump news and was down $2.05, or 5.01pc, at $38.88 a barrel by 1324 GMT. US oil was down $2.01, or 5.19pc, at $36.71.
US and Brent crude are heading for drops of around 9pc and 7pc respectively this week for a second consecutive week of declines.
“US unemployment data was a little bit below expectations but the oil price fall is part of the broader correction we’ve seen over the last few days driven by bearish macro sentiment and technical trading,” Harry Tchilinguirian, head of commodity research at BNP Paribas, said.
“We’ve moved below several short-term moving averages – 30, 50 and 100-days … so the market is looking for the next support level, which could be around $37 a barrel.”
US job growth slowed more than expected in September as the recovery from the COVID-19 slump shifts into lower gear. The Labor Department on Friday said non-farm payrolls increased by 661,000 jobs last month after advancing 1.489 million in August.
In early trade, Trump tweeted that he and First Lady Melania Trump had tested positive for COVID-19, prompting sell-offs on U.S. and European stock markets.<MKTS/GLOB>
Oil was already in negative territory after a bipartisan deal on U.S. stimulus continued to elude House Speaker Nancy Pelosi and the White House, adding to fears about worsening demand without more support for the economy.
“Risks lurk on both the demand and the supply side. Today’s news that U.S. President Trump and the First Lady have contracted COVID has lent additional poignancy to the whole picture and sent all risky assets, including oil futures, into a tailspin,” Commerzbank said in a daily research note.
Crude supplies from the Organization of the Petroleum Exporting Countries (OPEC) rose in September by 160,000 barrels per day (bpd) from a month earlier, a Reuters survey showed.
The rise was mainly the result of increased supplies from Libya and Iran, OPEC members that are exempt from a supply pact between OPEC and allies led by Russia – a group known as OPEC+.
Libya’s production has risen to 270,000 bpd, faster than analysts expected after the relaxation of a blockade by the Libyan National Army.
New COVID-19 cases worldwide have rise to more than 34 million, nearly 2 million more than at the end of last week, based on Reuters tallies.
This week marked the grim milestone of 1 million deaths and several countries are tightening restrictions and contemplating lockdowns as infections accelerate, prompting concerns about the impact on fuel demand.