Oil prices fall as new lockdowns affect economic outlook


Oil prices fell further on Monday after Brent crude last week took its biggest drop since April amid growing fears that new lockdowns aimed at slowing the spread of the coronavirus will hit demand for fuels.

Brent, the international benchmark, fell 4.6% to $ 35.74 a barrel on Monday, hitting its lowest level since May as economists downgraded their European growth forecasts in response to lockdowns across the board. the euro zone. West Texas Intermediate, the US marker, fell 6% to $ 33.64.

The grim start to the week came after British Prime Minister Boris Johnson on Saturday announced strict national restrictions in England just days after Germany and France adopted similar measures.

Traders and analysts are now rushing to estimate how the new lockdowns will weigh on demand.

Opec, the group of oil producers, already predicted that global oil demand would fall 10% this year to 90 million bpd on average, but expected it to return to nearly 95 million b / d during the northern hemisphere winter.

His prediction is now in doubt. Rystad Energy estimates that France and Germany – which together consume around 4 mb / d in normal times – could reduce their consumption by an additional 1.7 mb / d next month.

“The pressure we’re seeing on oil will be a real concern for Opec +, especially with Brent now well below $ 40 a barrel,” said Warren Patterson, head of commodities strategy at ING.

“Another major uncertainty for the market is the US presidential election. . . and the consequences that could have on oil, ”added Mr. Patterson, pointing to the possibility that a Democratic administration under Joe Biden would take a less hawkish stance on Iran.

Elsewhere, Asian stock markets were boosted by further signs that China’s economic recovery is gaining momentum. The Caixin China General Manufacturing Purchasing Managers Index climbed to 53.6 in October – its highest level since January 2011. Any reading above 50 for the private survey means activity is expanding.

“The recovery in post-coronavirus manufacturing continued to accelerate,” said Wang Zhe, senior economist at Caixin Insight Group.

Hong Kong’s Hang Seng index rose 0.9 percent, while China’s CSI 300 index of stocks listed in Shanghai and Shenzhen rose 0.4 percent. Japan’s Topix index rose 1.9% and South Korea’s highly technological Kospi rose 1.1%.

Wall Street S&P 500 index futures rose 0.1%, while those of London’s FTSE 100 fell 0.5%. Low trading volumes during Asian hours can increase the volatility of US and European equity futures.

The S&P 500 fell 5.6% last week amid concerns over the spread of Covid-19 and a hotly contested US presidential election.


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